THE LIBRARY OF THE UNIVERSITY OF CALIFORNIA LOS ANGELES 'HE NATIONAL ;XPENDITDRE OF THE NITED . KINGDOM Price: ONE SHILLING PUBLISHED AT THE OFFICES OF THE ECONOMIST, GBANVILLE HOUSE. 5. ARUNDEL STREET, STRAND. LONDON.W.C. The National Expenditure of the United Kingdom. WITH A PREFACE BY F. W. HIRST. PRICE ONE SHILLING. PUBLISHED BY "THE ECONOMIST" NEWSPAPER, AT GRANVILLE HOUSE. 3. ARUNDEL STREET, STRAND, LONDON, W.C. 1911. <^ ?b UGl.itlZU no 7764 PREFACE. Shortly after the publioation of Lord Charles Beres- ford's open letter to the Prime Minister demanding" another org^y of wasteful expenditure I submitted to Mr Asquiitih and to the Chancellor of the Exchequer a memorandum — in tlie compiJation of which I was greatly assisted by my colleagues on itihe s.taff of the Economist — on the actual and prospective state of our finances, with special reference to the .size and cost of the Navy. That memorandum is the basfis of the little book I am herewith presenting to the public in the hope that it may be the means of promoting large economies in the public service. It should be especially useful now, while the Estimates for next year are being framed, to render a comprehensive account of our National Finances for the benefit of those Avhose efforts to stem the tide of public extra\agance are too often baffled in a labyrinth of Blue-books. The old habit of watching and criticising the waste of public money ought to be revived. Members of the House of Com- mons, without distinction of partv, should welcome and make use of this manual, and they will, I trust, find it not only a guide to the Estimates, but a guide to lower Estimates and lower taxes an the future. There is always room for economy. There is always need for criticism of public departments, for the simple reason that in a public department there is no responsible person who has any pecuniary interest in keeping expenditure down, or even in making sure that the public gets value for the money received and spent. True, the Auditor-General is a chock upon actual illegalities and misiippropriations ; and the Treasury, ^>i>H»>l'.) if it ihas a thrifty and resolute chief, can do sometihang for ilhe taxpayer. \V,hcn Gladstone was in Jiiis pnime he contrived to infuse his own stern sense of responsd- bil'ity for public monies into almost every department of the State. In those days officials in the Army, the Navy, and the Civ/il Ser\ice were rcAxarded not for adventisdng- ithemsehes in the newspapers, not for asso- ciating^ themselves with costly projects, not for invent- ing- grand displays at the national expense, but for maintaining- efficiency in their depvirtmcnts and saving money by vigilance and foresight. In those days the Dreadnought (that most diabolical device for enlarging the profits of armament companies all over the world) would never have seen the light. More than once naval lords and experts and designers and contractors got together for no other purpose ; but they were frus- trated. Now, with the help of their journalists and their dockyard politicians, they have succeeded, and the measure of their success is the measure of the national and internationaJ loss. Ultimately, of course, an inter- national solution will be found. The idea of two Powers buildiing Dreadnoughts at a certain ratio to an unlimited extent until they are both bankrupt has not come to stay. Am arrangement like that between Eng- land and France which did so much for peace and economy after 1815 will be made again, probably in the form of an International Convention. But just now, with a fresh set of Estimates and a new Budget in view, our concern is how we can best look after our own interests, remembering always that excellent motto of Disraeli, " the more you reduce the burdens of the people in time of peace the greater will be your strength when the hour of peril comes." It is the opinion of eminent authorities, some with long experience of Treasury finance and others with long experience of Cabinet Government, who have been consulted b}' the writer, that the only remedy for this perilous growth of expenditure — the only means by which the ne\Aly imposed burden can be removed — is to break with tlie new method and return to the old tradition. The new method is for the First Lord of the Admiralty and the Secretary for War to find out from their subordinate admirals and g-enerals, as well as from eaq^erlv co-operating- experts and contractors, how much public money they might hope to dispose of within the year. This fixes the maximum demand, which is always ahead of the year before. Then the First Lord and the War Secretary consider the political horizo'n, the attitude of the Press, the growls of the economists and the demands of the Labour members. After this, their financial assistants are asked to cut off a few- thousands here and a few there. The Estimates are brought down to " an irreducible minimum." A letter is sent to the Treasury explaining- what extraordinary economy has been observed in framing- the Estimates. In December or January the Treasury is allowed to prune down the irreducible minimum. Then, perhaps, if the Chancellor of the Exchequer finds that the revenue is not coming in very well, and that some small sop is needed to propitiate the taxpayer, or the social re- former, he begs for another half-million. If the Prime Minister supports him this concession is reluctantly made after the Cabinet has been almost frightened out of its wits by dire threats from generals, admirals, and other warlike officials, and by inspired sensations in the Opposition newspapers. The old tradition was totally different. Sir Robert Peel, Lord Palmersiton, Lord Bcaconsfield, and Mr Gladstone would never have dreamt of allowing^ the balance of the national Budget to l>e upset by the head of the Admiralty or War Office, much less by the naval and military oflicials attached to those departments. The amount that could be allotted to the Army and Navy was arrived ai by the Prime Minister and the Chancellor of the Exchequer in consultation with llieir leading colleagues. When that amount had been decided its allocation was en- trusted to the First Lord and the Secretary for War, who endeavoured, according to their capacity and in- dustry, with the assistance of their expert advisers, to see that it was laid out to the best advantage. The old function of the paid expert was to assist in securing efhciency and economy in the administration of the sums allocated by the Government and the House of Commons. It was for the Prime Minister and lids col- leagues, as trustees of the national purse, to decide what should be the scale of taxation and expenditure. But now the expert claims to be the master instead of the servant of the public. He is backed by the Opposition, which criticises the Government not for spending too much but for spending too little. He " runs " the First Lord and Secretary for W'ar, bullies the Cabinet, and if his views are not fully adopted fills columns of the Press with plaints against economy. The Prime Minister is still allowed to deplore the burden of arma- ments, but if any measure of substantial retrenchment is proposed an outcry is immediately raised by the half- pay officers and the VeUow Press. There is ample scope, as we shall show, for savings in armaments, and there is no other way to reduc- tion of war taxes and the fulfilment of a social programme. The Government should go back boldly to the old tradition. It should declare its intention to revert gradually to the policy of maintaining our estab- lishments on a peace footing, and it should explain fully to the people why this policy is justified — nay, imperatively required, and what benefits will flow from it to the capital, labour, and credit of the country. The naval expert's favourite plea has been that this countr}' is in danger of a German invasion, because their fleet is rapidly approaching ours in strength. If this plea be accepted as a ground for entrusting more public money to the present Board of Admiralty, there ought to be no heskaition in the public mind as to the first step. Assuming the statements as to the danger we were in last spring to be true, there ought imme- diately to be a clean sA\eep of the wthoJe Board, or, at least, of all those chief officials who can be made responsible for the expvenditure of public money during the last ten years. The First Sea Lord now declares that there is no danger ; and the figures supplied by Mr M'Kenna regarding the German Navy have proved false. But those statements were the basis for an addition of more than five millions to the annual cost of our Navy ! If the false statements had been followed by an ample apology, if the Estimates had been with- drawn, or " deplementary " Estimates introduced the public critic might have condoned the Minister. Most men under such circumstances would have resigned. But what if these fraudulent Estimates — fraudulent be- cause they were based upon fabrications — should now be made a pretext for further " automatic " increases? Are these millions stolen from the taxpayers to be a kind of snowball gathering more and more of the national capital away from fruitful trade to melt away under the sunshine of superfluous patronage? One great cause of our difficulties is that for the last five years there has been no criticism of public expenditure by the Opposition. They have been asking for more, partly, perhaps, in the hope of making Tariff Reform " inevitable." The Conservative party, which at one time was really conservative of the national resources, has consistently attacked the Government, not for spending too much, but for spending too little. In our Naval Estimates of the last two years Mr M'Kenna pnaotically took his programme fdom what has been well called " the blue funk school." His last exploit added 5-J- millions, a third of the interest on our funded debt. Germany has not responded to this provocative chal- leng-e. The German naval estimates published in November showed an increase of only ;^825,ooo. Surely, this should sugg^est a retrenchment on our side, even if the Foreign OfTFice is unable or unwilling' to come to a friendly understanding- with 'the authorities in Berlin. Finally, let me remind the taxpayers of the United Kingdom that during the Boer War and since its close there has been an unprecedented enlargement of ex- penditure by public departments. We are ispending eight pounds for every five that we spent in 1895. Wihen such a thing happems in a great business or rail- way company a cnitical examination invariably detects many unproductive itejns which can be cut down without loss ; and where suoh an examination does not take place the result is invariably disasitrous to sihare- holders. What might be hoped for from a severe scrutiny of public expenditure is indicated by \\'ihat happened in the Stationery Department, where tlie in- quiries of a recent Committee resulted, I understand, in a saving of 10 per cent. (Did one of them receive the slightest recogniition ?) A saving of 10 per cent. oeen fully acquired by the great spending depart- ments. It ended, as wc all know, by swallowing up 1909-10. £ 18,220,000 3,090,000 1,720,000 i6 the Sinkino- Fund, thus giving iL^ finishing touch to that heavy depreciation of public credit which the Boer War, witli its enormous additions to the Funded and Unfunded Debt, had beg-un. Mr Asquith's policy pro- duced a marked improvemertt ; for in 1907-8 public borrowing had sunk below^ three millions^ having ex- ceeded eight in 1904-5 and six millions in 1905-6. This year the borrowing- is only a million, a substantial im- provement even upon 1897-8. The present Chancellor of the Exchequer and his predecessor in office deserve immense credit for cutting down these mischievous loans for works, and we wish the Telegraph Service could be compelled to equip itself out of profits. The following table illustrates these capital issues : — III. — Issues to Meet Other Expenditure. 1897-8. £ 300,000 160,000 595,000 (1) Under Barracks Act, 1890 (2) Under Telegraph Acts, 1892-1907 (3) Under Uganda Railway Act, 1896 (4) Under Public Offices and Build- ings Acts (5) Under Naval Works Acts, 1895- 1905 (6) Under Military Works Acts. 1897- 1901 750,000 350,000 596,000 1909-10, £ 950,000 230,000 100,000 Difference. — 300,000 + 790,000 — 595,000 — 120,000 — 596,000 — 650,000 Total borrowings 12,751.000 1,280,000 —1,471,000 The remaining issues from the Exchequer, compris- ing " advances for bullion," issues for the redemption of Debt, and Treasury bills paid off subject to renewal, raise technical difficulties, and we shall leave them on one side, as they do not really belong to our subject. LOCAL EXPENDITURE. The accounts of local authorities necessarily take a longer time to consolidate than the national accounts, and the latest figures g-ven in the Statistical Ab.stract f-or last year are for 1907-8. The following table shows 17 the growth in rates and in borrowingf in Eng-land and Wales. The loans raised in 1906-7 were less than in either of the previous six years, and the rise in the esti- mates for 1907-8 is quite negligible. Mr Burns has consistently used the authori'ty and influence of the Local Government Board to check the excessive habit of borrowing, which, if continued, must have endangered the credit of several local authorities : — Local Authorities — Receipts. 1897-8. 1906-7. Sources of Receipts. £ £ From rates 77,605,368 . . 59,557,199 From loans 14,482,710 . . 20,393,901 From other sources.. 31,539,175 .. 58,341,354 Total receipts . . 83,627,253 . . 138,292,454 * Provisional figures. 1907-3.* £ 59,623.513 20,686,656 59,796,985 140,107.154 A great increase in expenditure has taken place in the department of the poor law, and here again the conse- quences of the Boer War are plainly reflected. Expenditure by Unioks and Parishes on Poor Relief. £ , £ 1895-6 .... 12,282,741 1903-4 .... 16,493,952 1896-7 .... 12,532,572 I 1904-5 .... 17,066,898 The actual movements in pauperism will be seen from the following figures, which show the number of paupers in receipt of relief in England and Wales at the end of December : — Total Number. 1896 735,194 1897 733,689 1898 715.741 1899 699,634 1900 693.715 1901 712,382 1902 729,600 1903 744.658 1904 816.216 1905 805,643 1906 798,778 1907 800,101 1908 834.492 1909 820,493 Ratio per 1.000 Inhabitants .... 23 9 235 227 21-9 21-5 21-8 221 22-3 24-2 236 23 1 22-9 23-6 22 9 i8 THE NATIONAL DEBT. It will be useful and instructive to compare the his- tory of the National Debt, meaning^ thereby what are called in the Treasury return " the total aggregate gross liabilities of the State," during the seven years preceding the South African War and the seven years succeeding it. The following table, taken from the return issued on April 26th by the Treasury, gives (i) the gross liabilities ; (2) the sums borrowed, or liabili- ties created during the year, and (3) the net increase or reduction during the year : — Net Increase ( + ) Financial Yfiftr Aggregate Gross Liabilities or Decrease (— ) Liabilities on Created During of Aggregate April 1st. the Year. Gross Liabilities in the Year. £ £ £ 1892-3 677,069,062 2,056,000 — 5,949,125 1893 4 671,119,937 1,735,000 — 3,829,222 1894-5 667,290,715 760,000 — 8.289,163 1895 6 659,001,552 1,088,550 - 6,715,186 1896-7 652,286,366 694,114 — 7,114,841 1897-8 645,171,525 — 6,354,018 1898-9 638,817,507 3,932,336 — 3,423,773 1903-4 798,349,190 7,305,000 — 3,851,090 1904-5 794,498,100 11,757,432 + 2,238,391 1905-6 796,736,491 5,564,000 — 7,746,304 1906-7 788,990,187 5,555,000 — 9,825,483 1907-8 779,164,704 2,994,000 — 16,838,653 1908-9 762,326,051 2,636,155 — 8,204,742 1909-10 .... 754,121,309 1,280,000 + 8,342,316 1910-11 .... 762,463,625 •• •• The progress of the Works Debt (mainly for military and naval purposes) has now happily been checked. 19 CHAPTER II. OUR NAVAL EXPENDITURE. We shall now deal first and foremost with the great topic of naval expenditure, for it is to the heavy and in many respects unnecessary and provocative demands made by the Admiralty that mO'St of our present and prospective diflficulties in the reg^ion of national finance are mainly due. It will be well first to exhibit the history of the subject. HISTORy NAVAL E PENDITURE. From 1857 to 1887 Naval expenditure was almost stationary, and at the last-named date the British Navy cost only two-ithirds as much as the Army. In the next decade it overhauled the Army. Between 1897 and 1907 (the disastrous decade which included the Boer War) Naval expenditure rose from 22 to 31 mil- lions, while military expenditure rose from 18 to 28 millions. Yet common prudence would sugg^est that expansion in one department should be offset Dy economy in the other. The cost of our Army depends, or is supposed to depend, on the work it has to do — ■ in India, Africa, &c. — and its size bears no relation to the conscript armies of continental nations. But the size and cost of the Navy are regulated professedly by the size or estimated fig-htingf strcng-th of the navies be- longing- to other nations. In the earlier part of ttie nineteenth century, it was practically an accepted maxim on both sides of the Channel that the British 20 fleet should stand to the French fleet in the proportion of three to two. As Cobden once showed, by a series of statistical proofs covering; the period from 1816 to i860, " in comparing" the expenditure of the two coun- ■tries, it will be observed that they almost invariably rise and fall tog-ether." Thus if we added to our fleet, France added to hers, in the belief that her diplomatic position would be weakened if she submitted to a smaller proportion than two to three. Under a restless 'and unconsftitutional Emperor like Napoleon the Third, France played a rather aggressive and domineering role in Europe. She drove Austria out of Italy, in- vaded Mexico, and finally declared war on Prussia. It was lonly natural, therefore, that British statesmen -should take care to maintain an ample margin of naval supremacy, and this margin all parties held to be a superiority of about 50 per cent, on paper. Occasional outbursts of panic and excitement made very little im- pression upon our Governments. Statesmen kept their heads. The leading newspapers were conducted with prudence and moderation, and up to 1885, the Naval votes seldom exceeded loj millions. In fact, at that time, the Navy cost less than the Army, and about one- third of what it costs now. Twenty-five years ago, 'however, an agitation was fomented by Mr Stead and others, who declared that our naval expenditure was not large enough. It was declared that a readjustment of the naval balance had become necessary, and eventually the formula of the two-Power standard was invented in order to give a plausible excuse for naval expansion. So our expenditure iDegan to rise. The thirteen millions point was passed in 1886, and in 1889, with a minion transferred from the Army vote, the fig-ure nearly reached seventeen millions. This in- crease, of course, invited France to fresh efforts, and the French vote rose from eig"ht to ten millions in 1892, while Russia was spending" a little over five millions. Great Britain, however, went on forcing- the pace, and our Estimates went forward by leaps and bounds, pass- ing 20 milions in 1897, and 25 millions in 1899. In that year the French vote reached 12 millions, at which figure it remained practically stationary. Russia now joined in the race, increasing her naval votes from six millions in 1897 to eleven millions in 1901. We may now see what was our own expenditure just before the South African War, with the numbers of men and ship- building contracts, as given in the Navy Estimates, which did not include appropriations in aid or expendi- ture out of borrowed money. Navy Expenditure Bbtobk the War. Shipbuilding Total Contracts. Expenditure. Year. Numbers. £ £ 1896-7 91,507 .. 5,292,911 .. 22,271,902 1897-8 96.925 .. 3,553,649 .. 20.848,863 1898-9 103,330 .. 4,864,295 .. 23,880,875 The South African War broke out in October, 1S99. The ill-feeling aroused by that war on the Continent, nnd the fear of intervention by the European Powers while our troops were in Africa, caused further sensa- tional additions to the Navy. Including the amounts borrowed for new works, the expenditure reached the unparalleled figure of 31 millions in 1900, or three times as much as had loeen demanded when Lord Goschen, the First Lord, served his apprenticeship at the Admiralty as Mr Goschen in 1871. Immen.se sums, 'borrowed with fatal facility, were sunk in docks, basins, dredging, and other works, in all parts of the world. 22 many of which have been abandoned as useless, or admitted to be unnecessary. This, we may add, is the usual result of spending- money which is borrowed and not raised immediately by itaxation. The Admiralty and the War Office are only the big-gest examples of the relation between waste and borrowing. Toovn councils have often frittered away the money borrowed from posterity in the same way, though not to the same extent, as the Admiralty and the War Office. With the establishment of peace in South Africa, M-ith the return of the Army to Great Britain, and with the dying down of anti-English sentiment on the Conti- nent, our naval outlay should have declined as the dang-ers of 1900 disappeared. Nothing of the kind happened. We forced the pace, and Germany was at last induced to enter the field of rivalry. How expendi- ture went on growing the next table indicates : — Shipbuilding Total Contracts. Expenditure, Year. Numbers. £ £ 1899-00 108,595 . . 5,111,279 . . 25,731,220 1900-1 112,429 .. 6,931,654 .. 29,999,529 1901-2 117,116 .. 6,794,326 .. 30,981,315 1902-3 121,870 .. 7,601,950 .. 31,003,977 Then came further and even more important changes in the initcrnational situation. In 1904 the war between Russia and Japan resulted in the extinction of the Rus- sian navy, and so made the old two-Power standard a meaningless formula. France became more friendly towards us. A prospect of retrenchment was opened up ; for not only had the Russian naval bogey been destroyed by Japan, but an entente cordiale had been effected with France, and two long-standing differences had been finally settled by the French recognition of our position in Egypt, and by ours of the French posi- tion in Morocco. In the Far East an alliance with Japan brought another strong fleet into partnership with our own, and relieved us of all possible anxiety in the Pacific Ocean. Our natural friendship with the United States was being steadily streng-thened under the auspices of Mr Bryce. On the continent of Asia all possiblhties of difference with Russia were removed by an agreement with the Russian Governmemt, and although many people in England disliked the idea of association with a despotic Power, no one could deny that the agreement made for peace, and might have been used in the Interests of economy. These four events were each and all events which should have reassured us, and have prepared the way for a reduction In naval armaments. Economy in armaments was the great cry of Liberals, from Sir H. Campbell-Bannerman and Mr Asquith downwards, and there was no more severe and uncompromising advo- cate of thrift than Mr M'Kenna. To a slight extent this was realised by the Admiralty in the last year of Mr Balfour and again under Sir Henry Campbell Ban- nerman, for it decided to reduce both the Mediterranean and China Squadrons, recalling eight out of the four- teen battleships In the Mediterranean and all the four battleships from the Far East. Thus the fighting strength of the home fleet was immensely augmented. A second change In the policy of the Admiralty stopped a considerable source of expense, even If it did not actually add to our fighting strength in home waters. This change was the decision to give up the practice of maintaining great numbers of cruisers In every part of the world. Many of these " protected cruisers " were recalled and " scrapped." A further change of policy withdrew one of our naval squadrons from the other side of the Atlantic, its place being taken by a squadron of armoured cruisers with its base in Great Britain, which now and then crosses the ocean. As 24 a result of this, the West Indian dockyards were abandoned, and a considerable saving effected. These economies, however, were almost entirely absorbed in new expenditure on construction. All this time prodigious and unparalleled sums were being ex- pended on new ships, so that the British fleet attained a fighting strength absolutely beyond all precedent ; the two-Power standard, indeed, was far surpassed, and our fleet rose to something between a three and a four-Power standard. But the craven spirit of the jingoes and panic-mongers rose with this expansion, and with every fresh million they got the naval con- tractors clamoured for more. Here, then, are the figures from the Naval Estimates of the last eight years : — Navy Exphuditube ArraR the War. Year. Numbers. 1903-4 125,948 1904-5 130,490 1905-6 127,667 1906-7 127,431 1907-8 127,228 1908-9 126,935 1909-10 (estimate).. 128,000 1910- 11 (estimate) . . 131,000 Shipbuilding Contracts. £ 10,832,371 10,071,514 7,781,483 8,388,514 7,452,262 7,174,464 8,278,300 12,395,400 Total Expenditure. £ 35,709,477 36,859,681 33,151.841 31,472,087 31,251,156 32,181,309 35,142,700 40,603,700 Why is it, then, with these facts before us, that our Xavy has not been put upon a peace footing, main- tained, of course, in full efficiency, but yet not con- tinually in a state of provocaitive expansion and restless increase? The official answer is found in the rise of a new naval Power. Until a few years ago the Ger- man Government contented itself with the pos.ses.sion of the most powerful and best organi.scd army in the world ; but more recently, alarmed, perhaps, by the close alliance between the two great military nations on the Eastern and Western frontiers, and also by the 25 " isolation " which is supposed to be the result of a malign British diplomacy, it has turned its thoughts to sea power. For this change the Emperor himself may be held mainly responsible, for it does not appear to be popular either with the mihtary cas'te or with the masses of the people, if we may judge by the growth of the Social Democrats. Xow, the German fleet which has struck such panic is largely imaginary, and the supposed danger is en- tirely due to the fact that our Admiralty invented the Dreadnought and fostered an impression that this type of ship had superseded all others. It is only by imagining that at some future date Germany may have as many Dreadnoughts as Great Britain that any material for panicky extravagance can be got to- gether. But many eminent authorities, and apparently most of our naval captains and admirals, consider ,that the Dreadnought type is positively inferior to the King Edward ; and no one can be found to suggest that battleships of every other type should be scrapped, which would be the logical consequence of adopting the Dreadnought principle. We have at this moment a splendid fleet, in a state of unequalled readiness, and manned with crews far better trained than those of any other nation. Let us see, in tabular form, exactly how we stand now in comparison with Germany and other first-class naval Powers in first-class battleships and armoured cruisers less than ten years old. The follow- ing table, based upon the Dilke return, shows in a comparative form the effective strength of the orinci- pal navies, disregarding older vessels and smaller vessels (in which we have an enormous preponderance). Amongst " prc-Drcadnought battleships of modern type " arc included all battleships which are as efiicient as the British Formidable class, or more so, and in 26 " pre-Invinciblcs of modern type" are included all armoured cruisers which arc as ellicicnt as the British Cressy class, or more so, correspond- ing- roughly to all ships completed within the last ten years. By excluding ships older or weaker than For- midables or Cressys, we get a fair estimate of the relative strength in first-class modern ships. The Invincible and its improvements are powerful hybrids between the battleship and the cruiser and practically equal to Dreadnoughts in strength : — Strength of Principal Navies in First-class Ships, Built, and Building, on March 31, 1910. Battleships. Armoured Cruisers. Pre- Dread- D read- Invin- Pre-In- Total noughts noughts cible! and vincibles & Later of Modern Later of Modern Types. Type. Types. Type. ^•^"'-Mbuildin^ 7 9 23 3 3H 28 )" ^.States \^r^ 4 0) 4 16 ] None 1 ^^ }37 G-^-^lSing 2 8 15 None 3 'k l36 ^-- • Ibuilkg None 6 None f 16 1 2 1 32 Japan.. ] ^"?!V " ' *^ 1 building 1 3 9 None 1 '? f24 Ttoi„ built .. ^^"■^y '• 1 building None 2 '6 ] •• J None f 5 I 2 [15 Russia.. IS;" building None 4n .' 1 None 1 I 1 ^^ (1) Including the " Michigan " and " South Carolina." (2) No progress is being made with these. (3) Including two ships for Australia and New Zealand. Mr Bowles said recently of Uie two-Power standard that it is the kind of notion which attracts a man who wants to relieve himself of thought by putting has mind in a pigeon-hole and leaving it there. But it is clear from this table that our Navy is stronger than even that standard demands. We are far ahead, and will remain far ahead, of all conceivable combinations of antagonists. It would be quite reasonable for in- stance, to apply the two-Power standard to a com- bination of Germany and Austria. But Austria is at present too unim.portant for the Dilke Return, and the Austrian Dreadnought myth, conjured up last March by Mr M'Kenna, has now been abandoned as hopeless. The table includes not only ships in commission, but all ships actually laid down, and thus gives an idea of the relative strength of navies not only at the present time, but as far ahead as it is possible to prophesy with centainty. It is the custom at present to attach special importance to the condition of affairs in 1912. The reason for selecting that year is that the present ship- building spurt of four ships a year by Germany wall cease after 191 1, when only two ships a year will be laid down. On April i, 1912, the end of the financial year, we shall have 20 Dreadnoughts ready ; shortly afterwards the Australian and New Zealand cruiser- battleships will be ready, and in the autumn five new ships will be added, making 27 " capital " ships in all. It is now admitted that Germany cannot have more than 13 Dreadnoughts on April i, 1912, and four more (those laid down in 1909-10) about the end of the yeai. By other authorities it is thought that she can have only nine at that date. The best summary of the future po.sition as regards Dreadnoughts is that pro- vided by the Navy League Annual, edited by Mr .\. Hurgoyne, M.P., from which we extract the following 28 fii^ures for Ihe leading- countri'es to whicli we have already referred above : — NuMBEK of Drbadnought Eka Units Completi on Aphil let. 1910. 1911. 1912. Great Britain 8 12 20 United States 2 4 6 Germany 2 .... 5 .... 9 Franco nil .... nil .... 6 Japan 1 2 .... 4 Italy nil .... nil .... 1 Russia nil .... nil .... nil Austria nil .... nil .... nil Germany + U.S. A 4 9 15 A.s to the value of future predictions, " the writer remembers, to hi.s comfort," writes Mr Burg^oync, " that in 1906 the pessimists insisted that a period of danger would be reached in mid- 1910 ; last year, 191 2 was to be the time of direct sitress ; now it is the summer of 1913 ; something- or other, therefore, crops up from time to time which leads the expert or oritac periodically to revise his estimate." Thus it is ; and what crops up is the growing- confidence of those con- cerned in spending in the absence of all criticism and opposition from those concerned not to spend. For any reasonable person this table of the Niavy League Annual should be conclusive that our programme of construotion has been allo^\■cd to increase beyond A\hat is necessary for perfect security. Number, be it re- membered, counts, quite apart from the type or size of the ships, for torpedoes are no respeotors of pat- terns, and " every serviceable ship that carries a good gun may fire a decisive shot." Again, it must be reckoned on our side that we can still build faster than the Germans, and that we have more slips available for the largest vessels ; so that we can continue our poilicy of building from year to year and making alterations and improvements in the design of each successive ship. 29 TEE NAVAL ESTIMATES OF 1909 AND 1910. To criticise our Xaval Estimates usefully, what is really needed is not a Press or Platform agitation con- ducted by persons who have never even examined the naval Estimates, but a careful analysis of the expendi- ture. Most people, undoubtedly, fancy that the three million increase of the Navy Estimates of 1909 and the five million increase in 1910 were due to the necessity for meeting- Germany's great efforts to follow the example set by us of buildings gigantic ba/ttleships. But in the year 1909-10, in spite of the large increase of the shipbuilding vote, a much smaller proportion of it was expended on battleships and armoured cruisers than in the year previous. The actual expenditure on battleships and armoured vessels for the two last years was approximately as follows : — 1908-9. 1909-10. £ £ Armoured vessels 5,500,000 . . 5,027,000 Unarmoured vessels 2,325,000 . . 3,940,000 7,825,000 . . 8,967,000 The.>>e amounts do not include armaments. They show that although the total expenditure was increased by j(^.} ,1^2,000 a less expenditure was provided on armoured ships by nearly ;£j"50o,ooo, and a g^reater ex- penditure on unarmoured ships by no less than /T 1, 6 1 5, 000. The 1908-9 programme started a vast number of unarmoured vessels, viz. : — Six protected cruisers of 4,800 tons each, to cost probably nearly ithree millions, of which ;^'i, 380,000 will fall upon the year igog-io. Thdrty-one torpedo de.-itroye«rs of from 800 to 1,000 tons, to cost about three millions, of which about one-half, or _;f 1,520,000, will fall on 1909-10. Twen/ty-four torpedo boats, first class, of 2S0 tons, of \rhich ;^56,ooo only will fall on 1909-10. Twenty submarines of 320 tons each, to cost ;^96o,ooo, of which ^'324, 000 will fall on 1909-10. 30 We should have thoug-ht that it would not be neces- sary to add to these classes of vessels in the comings year. But provision is made in the Estimates for 1910-11 for six more crudsers of 3,500 to 4,800 tons, of which _;^38g,ooo only will fall on 1909-10 and ;^2,2oo,ooo later — ;^i,40o,ooo probably on 1910-11. All this from the point of xiow of " the Dreadniought crisis " was money thrown away. Only battleships count in a panic. The whole arg-ument of the Govern- ment and of the Front Opposition Bench turns on battleships. But even so Mr M'Kenna was not content. He asked also for twenty more torpedo destroyers. The cost of these was probably as much as those pro- vided in 1908-9 — viz., ;^2,ooo,ooo, of which only ;^ioo,ooo is provided in 1909-10, leaving ;^i,goo,ooo for 1910-11. Even so, the taxpayer's cup was not full. He had to subscribe for ten more submarines, to cost about ;^5oo,ooo, of which only ;;^'7o,ooo is pro- vided, leaving ;£'43o,ooo for 1910-11. Hence we had on hand in 1909-10 : — 12 Protected cruisers of 3,500 to 4,800 tons. 51 Torpedo destroyers of 800 to 1,000 tons. 24 Torpedo boats of 280 tons. 30 Submarines of 320 tons. These figures are stupendous, and we may well ask why a Government which wished to combine secuinity with economy should have hurried on 117 small craft which do not count wiith the naval alarmists. Apparently the best naval opinion and common sense agree in preferring a somewhat smaller battleship which can enter all our ports to the Dreadnought which cannot. But we strongly advise the economists in Parliament to concentrate their criticisms against this enormous and excessive expenditure on un- arnioured ships built, many of them for commerce de- 31 struotion. The aggregate cost of these 117 vessels will be about /"13, 000,000, and a large part of it will remain over for 1910-11 and later years. " The programme of unarmouied vessels seems to me to be a very bad one," wrote a competent and experienced critic of naval administration. " I cannot believe it is necessary to build six more cruisers, twenty more torpedo desitroyers, and ten more submarines. We have already on the Navy list 141 torpedo destroyers, 13 ocean torpedo destroyers, 42 submarines, and any quantity of protected cruisers, large and small. ^Vhy should we add so enormously to their number in the two years 190S-9 and 1909-10? " If battleships are the crying need, why not postpone the construction of smaller vessels, which can be built rapidly at a later date? It should be recalled that the German shipbuilding programme is to be spread over a great number of years. It will not be completed till 19:20, by which time they may have 33 of these big ships. But during the first half of this period they are to be built at the rate of four a year, and in the second half at two a year. The pressure, therefore, on the British Admiralty to meet these German battleships will be greatly reduced in 191 5. In cruisers we are enormously preponderant. Why go on building them unless there is some secret understanding between the experts and the contractors? PAETIOtJLARS OF INCREASE IN 1910, Let us now give the official explanations of the chief differences between the Estimates of 1909 and 1910 which form the preface to the bloated Estimates of 1910 : — Vote i.— Wages, &c., ok Officers, Sea.men, and Boys, Coast Guard, and Royal Marines. — Increase, ;^io9,2oo. Due principally to provision for larger numbers of subordinate and warrant officers, petty officers, men, and boys, for varia- tions in average rates of pay of commissioned officers and for 32 greater expenditure on account of good conduct pay and oi extra pay to officers and men employed in submarine and torpedo boats ; modified 'by reductions in numbers of flag and commissioned officers, coast guard, and Royal Marines. Vote 2. — Victualling and Clothing for the Navy. — Increase, ;^83,5oo. Increased requirements for wages of arti- ficers, &c., and of police in victualling yards and of crews of victualling yard craft, for lighting and water services, for mess traps, seamen's clothing, soap, and tobacco, and for freight, &c. ; modified by decreased provision for the consitruction an7°°- Due to anticipated requirements under the Superannuation Act, 1909, to increased provision for super- annuation allowances to artificers, &c., and to an increase in the contribution in aid of the fund for pensions of the mettro- politan police force ; modified by reduced requirements for Huperannuation allowances and compensation allowances (aboli- tion of officei to salaried officers, for superannuation allow- ances to coarf guard, and for pens.ions to naval ordnance officers, supervisors, &c. 2 34 DETAILED OOMPARISOHS OF THE VOTES. The following' statemenit shows the numbcr.s borne and the actual expenditure on Naval vServices for the years 1896-7 to 1898-g (inclusive) : — Year. 1896-7 . . 1897-8 . . 1898-9 . . Vote A. Number. VOTK 1. Wages, &o., of Officers. Vote 2. Victuall- ing and Clothing. £ I £ 91,507 4,381,124 | 1,328,904 96,925 I 4,608,547 j 1,378,187 103,330 4.938,000 1 1,727,271 Vote 3. I Vote 4. Vote 5. Medical | Educa- Establish- Martial : tional luents, &c. Law. Seivicea £ £ 144,707 ! 10.959 154,985 I 11,345 165,812 ! 12,079 £ 81,172 84.650 85,016 o ^ "3 ^ Jz > P3 Vote 8. Shipbuilding, Repairs, Maintenance. &c. Vote Vote 9. 10. Year. Section I. Section 11. Personnel.^ Matdriel. Section III. Contract Work. Naval Arma- | Works. ments. ; 1896-7. . . . 1897-8.... 1898-9.... £ 62,241 65,715 64,675 £ 206,023 227,582 243.128 £ i £ 2,163,720 ' 2,856,725 2.185.313 2,381,098 2,< 09,319 3.248,447 £ 5,292,911 3,553,649 4.864,295 £ £ 2,644,455 475,747 2,829,397 618,680 2,618,748. 730,589 Vote 11. Vote 12. Vote 13. Vote 14. Vote Vote 15. 16. Balances Irrecoverable. ure. Year. Miscel- laneous. Admir- alty Office. Half-Pay, &c. 1 ri CM Civil Pensions, &c. Naval Force in A'str'l'sia. ■e'3 1896-7.... 1897-8.... 1898-9... £ 209,676 295,046 264,209 £ 238,474 244,652 248,198 £ 745,687 751,313 771,623 £ 1,039,278 1,063,281 1,0S8 638 £ 1 £ 326,944 60,621 332,.166 ; tO.482 337,3^4 £0 829 £ 2,535 2,575 2,655 £ 22,271,902 20,848,863 23,880,875 The following are the official explanations : — (1) 1896-7.— Net Increase on Expenditure for 1905-6, £2,634,664. Increased numbers in the Fleet and improved pay to Warrant Officers. Continued increase of contract shipbuilding in consequence of the conclusion of tba Naval Defence Act Progiamme, and in requireiucuii for armaments and reserves for new ships. (2) 1897-8.— Net decrease, £1,423,039. There was a large fallin),f ofi of expenditure under Vote 8, owing to the Engineering Strike, There was no diminution in requirements, and the increases under other Vote'^ were due to progressive growth of numbers of the Fleet, to special expenditure in con- nection with the Diamond Jubilee Celebrations and affnirs in Crete, and to the establishment of a Naval Depot at Wei-hai-Wei (Vote lOi. (3) 1898-9.— Net increase, £3,032,012. Increase in numbers borne. Strength- ening of Stocks of Victualling Stores and f^rst provision of a reserve of kits (or emergency. The requirements under Vote 8 were being more fully met. but were still retarded by the effertg of the Labour troubles. Continued increased espeiiditurc on Works due to the provision of Barracks, Hospitals, &c., and the development of Wei-hai-Wei. 35 The following: statement shows the numbers borne and the actual expenditure on Naval Services for the years 1905-6 to 1908-9 and the estimates for 1909-10 and igio-i i : — Vote 1. ' Wages, Vote 2. Vote 3. Vote 4. Vote 5. Year. Vote A. &c., of Victualling Medical Martial Educa- Numbers. Officers, and Establish- Law. tional &c. Clothing. ments, &c. Services. £ £ £ £ £ 1905-6.... 127,667 6,835,909 2,157,427 265,457 13,279 151,076 1906-7 .. 127,431 7,064,837 1,865,994 253,274 12,857 155,705 1907-8 . . 127,228 7,025.029 2,036,956 254,442 12,879 160,198 1908-9 . . 126,935 7,158,415 2,374,422 253,803 12,521 158.369 1909-10 .. 128,000 7,280,200 2,416,800 258,700 12,700 159,300 (Estim'te) 1910-11 .. 151,000 7,389,400 2,500,300 263,900 10,900 157,400 (Estim'tei _ Vote 8. Vote VOTH ^ . ► a- Shipb uilding. Repairs, 9. 10. (O.'E Mai'n»or,!i„^o A^-.^ Year. o-S-H o25 t ' ' tit rS^^I Section Naval ^mm OK Section I. Section II. III. Arma- } Works. » Personnel. Materiel. Contract ments. i 1 Work. 1 £ £ ! £ £ £ £ 1 £ 1905-6.... 73,083 385,C*0 2,625,285 4,905,075 7,7a 1,483 2,858,131 1,798.6 !-6 1906-7 . . 62,328 34«,291 2,4-.0,44S 3,09Al?4 8,388,514 2,725.458 1,759,972 1907-8 . . 60,342 361,495 2,717,202 3,345,921 7,452,262 2,106,795 2,453.573 1908-9 . . 66,836 365,969 3,025,074 4,010,655 7,174,464 2,031,3612,172,744 1909-10 .. 67,300 367,000 3,148,200 4,392,1c 8,278,300 2,381,00012,916,300 (Eetira'te) 1 1910-n .. 69,200 372,500' 3,444,10c 4,614,100 12,395,400 2,781,0:0|2,995,300 (Estim'te) ' 1 Vote Votk Vote Vote Vote Vote 6 11. 12. 13. 14. 15. 16. o u S 9 Year. , . e? TO a a « S'<5 « s o o .£ « as 5. > -J S fi4 'i'7. « •a-- « ■5 o u p a K £ £ £ £ £ £ £ £ 1905-6.... 497529 342,30r 832,798 1,229,09ft' 397,750 2,565 33,151,841 1906-7 . . 404 174 347.034 840,779 1,270,13^1 381,596 1,554 31,472,087 1907-8 . . ibS.Qlii 357 6C8 857,568 1,320,85*. 375.292 3,518 31,251,156 190(1-9 . 4iO,744 365,90V 868,666 l,344,730l 3*6,615 10,017 32,181,319 1909-10 .. 438,800, 378,200 1 890,200 1,387,800 3t9,800 .. i5,142,70O (Kitim'tO) J910-11 .. 459,000, 388,800 924,500 1,430,400 407,500 , , 40,603,700 lEftlim'U) 36 The following are the official explanations:— (1) 1905-6.— Net decrease, £3,707,840. Decrease in numbers. Incveabed refjuircments in respect of Wafccs, &c., of Ofllcers, Seamen, &c. Reduced expenditure on Victnalllng and Clothing, Medicines, and Medical Stores. Increased expenditure in connection with the training of Naval Cadets and Royal Naval Reserves. Reduced expenditure on the Khipbuilding, &c., pro- gramme, on Naval Armaments, and on Works. There was a further annuity of £381,574 under the Naval Works Acts. Reduced charges in respect of Miscellaneous Effective Services. Additional expenditure on Hall-Pay, Naval and Civil Pensions, &c. Note.— In addition to the cash expenditure, stocks of stores purchased in previous years were drawn upon without replacement to the extent of £768,850. (2) 1906-7.— Net decrease, £1,679,754. Increased requirements in respect of Wages, 4c., of Officers, Seamen, Ac, and in connection with the training of Naval Cadets. Decreased requirements for Victualling and Clothing, Medi- cines and Medical Store:-, Scientific Services, and for Royal Naval Reserves, Reduced expenditure on the Shipbuilding, &o.. Programme, on Naval Arma- ments, Works, Miscellaneous Effective Services, and on Civil Pensions. Further Annuity of £78,49'/ under the Naval Works Acts and additional expenditure on Naval Pensions, &c. NoTR.— In addition to the cash expen:liture, stocks of stores purchased in previous years were drawn upon without replacement to the extent of £1,024,200. (3) 1907-8.— Net decrease, £220,931. Reduced requirements in respect of Wages, &c., of Officers, Seamen, &c. Increased requirements for Victualling and Clothing, and for Medicines and Medical Stores. Increased expenditure in connection with the training of Naval Cadets and Royal Naval Reserves. Reduced expenditure on Scientific Services, on the Shipbuilding, &c.. Pro- gramme, on Naval Armaments, on Miscellaneous Effective Services, and on Civil Pensions. Further Annuity of £120,093 under the Naval Works Acts, and additional expenditure on Works, on Half-Pay, and on Naval Pensions, &c. Note.— In addition to the CTsh expenditure, stocks of stores, purchased in previous years were drawn upon without replacement to the extent of £1,234,802. (4) 1908-9.— Net increase, £930.153. Increased requirements for Wages, &c., of Officers, Seamen, &c., for Viotualling and Clothing, for training of Naval Cadets, for Scientific Services, and for Royal Naval Reserves. Reduced expen- diture on Medical Establishments and Services, on the Shipbuilding, Ac, Pro- grammes, on Naval Armaments, on Works, and on Civil Pensions. Further Annuity of £49,630, under the Naval Works Acts. Increased requirements for Miscellaneous Effective Pervices, for Half-Pay, and for Naval Pensioci, &c. NoTii. — In addition to the cash expenditure, stocks of stores purchased im previous years were drawn upon without replacement to the extent of £551,125. (5i 1909-10.— Net increase, £2,961,391. Increased requirements for Wapes, Ac., of Officers, Seamen, &c., for Victualling and Clothing, and for Medicines and Medical Stores. Increased expenditure in connection with the training of Naval Cadets, Scientific Services, Naval Reserves, Naval Armaments, and the Shipbuilding, &c., Programme. A farther Annuity of £66,324, under the Naval Works Acts, together with a general increase of expenditure for Works Ser- vices, chiefly caused by the transfer to Navy Estimatts of certain services previously provided for out of funds raised under the authority of the Navy Works Acts, resulted in increased provision under Vote 10. Increased require- ments for Miscellaneous Effective Services, for Half-Pay, and for Naval and Civil Pensions. (6) 1910-H.-Net increase, £5,461,000. The most stupendous contrast of aU is between this net increase of 5^ millions in the Spring" and the German reply in the Autumn — an increase of les« than a million. How can any sane person protend after this that the German menace is anything" more than a pretext? 37 SOME OBJECTIONS TO THE DREADNOUGHT. When the Admiralty decided that our fleet ought to be superseded in order to be rebuilt, and for that purpose introduced the Dreadnought type of battleships, they did it with such a beautiful combination of secrecy and advertisement, that almost every journalist in the United Kingdom was suddenly inspired to thank heaven for giving us the great Sir John Fisher. How Mr Balfour's Cabinet, when it was persuaded (and Mr Bal- four apparently is persuaded) that two Dreadnoughts costing the same are much superior to three King Edwards, could have been so supremely foolish as to sanction the building of the first Dreadnought, we never have been able to conceive. But the time seem'S to be at hand when naval opinion will pronounce against the monster battleship. For the purpose of re- turning from the Dreadnought, it would be sufficient if a balance of naval opinion pronounced that three King r^dwards are equal in fighting capacity to two Dread- noughts, or that three improved King Edwards arc equal to two improved Dreadnoughts. For if the three co.st the same as the two, they have the enormous advantage of being able to enter most of our harbours and docks, whereas the Dreadnought type cannot do so, and enormous and increasing sums will have to be added to the naval estimates for the purpose of dee-pen- ing harbours, enlarging docks, and so forth. An Admiral of the Fleet, writing to the Economist in regard to the Dreadnought policy, observed : — " It is worth inquiring if this expenditure cannot be reduced without impairing the strength of the Navy, or — assuming that reduction is impossible — if the money could not be so spent that our naval strength would be more surely increased than it can be by adhcr- f-nce to our recent construction policy. What we want to know is if the maintenrmce of our battleship force at its present strenglh and all necessary expansion of .'ii)8uH) 38 il cannot be effected in any way but by the continuous production of ships of the Dreadnought kind, progres- sively changing as it is. It will have l>ecn noticed that the ship's particular and, so to speak, i>ersonal name has been given to the whole kind. We arc not told that such or such a foreign country iy building battleships, but that it is building Dreadnoughts, and that we must build Dreadnoughts in reply. There is only one other instance of a particular ship's name not descriptive of employment being adopted as the designation of an entire kind or class. The first specially built armoured turret-ship was called the Monitor, and the name has been used ever since to designate ships of the kind. There is something so interesting and instructive in the parallel use of the two names that attention may well be directed to it. The first Monitor had only just been got ready for sea when an opportunity of widely extending the knowledge of her name occurred. It soon became well known throughout the civilised world. It was assumed that the Monitor, like the Dreadnought more than forty years later, had made every existing man-of-war obsolete. In all the considerable navies of the day and in some of the smaller ones she was promptly copied. It was not perceived for some time that, though promising to be useful in special circum- stances not likely to occur often, she had little value for the general purposes of war. Other types, in fact, had to be substituted for that which she repre- sented. To recall some of her characteristics should be interesting at this moment. She had what has lately been called an * all big gun ' armament. She had no secondary battery, but carried only heavy guns in pairs — at first one, then two, and eventual'y in some shiips as many as four pairs. As she was abandoned as universally as she had been imitated, it will hardly be v/rong to assert that the imitation was due to a desire to be like other people rather than to reasoned demon- stration of the I\Ionitor's supereminent merits. "The Dreadnought type was avowedly introduced in order greatly to surpass in power any previously existing ship. It may be said that generally a new type 39 is intended to be an improvement on any of older date, but the ship embodying' it need not be held to have rendered all predecessors quite or nearly obsolete. That she would do the latter was widely claimed for the Dreadnoug^ht. It is, therefore, not very surprising that her special name has been adopted — as that of the Monitor was — to designate all ships of her kind, viz., those of the battleship class. In one important respect the history of the Monitor was repeated in that of the Dreadnought. The latter also was imitated in every considerable navy and some minor navies. Imitation of the Monitor type was due to a general desire to follow the fashion. This at least oug-ht to suggest caution to those who are ready to assume that imita- tion of the Dreadnought rests upon a sounder founda- tion. When the latter ship was declared by writers in the newspapers to have made all existing, ships obsolete or prematurely obsolescent, it was pointed out that she in her turn might soon be exposed to a similar fate. A few figures will show how this could be. The Dreadnought had an official displacement of 17,900 tons. She was soon followed by the Bellerophon class, with 18,600 tons displacement. Xext came the St \'incent class of 19,250 tons. Later we have the Nep- tune, with a displacement of 20,000 tons or more. As two ships, said to be of 26,000 tons, are being built for the United States navy, we ought — if we still accept the doctrine to which we owe the introduction of the Dreadnought — 'to assume that the not yet com- pleted Xeptune has already been made obsolete or pre- maturely obsolescent by the American ships. We are likely to be committed to what Sir William White calls the ' perpetuation on an increasing scale of size and cost of so-called Dreadnoughts.' There is reason for apprehending that a couple of millions of pounds ster- ling will be deliberatelv expended on the construction of each of several ships, which — in accordance with our own widely propagated creed — can be, and will be, rendered almost obsolete before they take the water. This, moreover, does not allow for the increase in ex- penditure caused by the necessity of making new docks 40 big enough to admit the new ships, enlarging old docks and basin entrances, or deepening channels. " It has lately been stated, on good authority, that ' many naval officers consider the King Edwards to be superior to the Dreadnought in offensive and de- fensive powcM-.' The King Edwards are earlier, smaller, and less costly. It may be taken as certain that a still larger number of naval officers believe that the sum of money expended in producing the Dread- nought and her successors, if utilised in a different way, would increase the effective strength of our battleship force much more. It is not necessary to assume that the Drcadnouo^hts are not powerful ships, but it may be maintained that we could have a more powerful group of ships for the sum that they are costing us or an equally powerful group for a smaller sum. In naval affairs it is specially desirable that means should be proportionate to ends. The substance of a nation may be expended, and largely wasted, in providing not that which is necessary for the work to be done, but that which cannot be utilised to its full capacity. We ought not, of course, to delay the completion of ships already begun or designed, as it would be absurd to say that they are useless. It is, nevertheless, very desirable that a searching investigation into the real utility of the Dreadnought type should be made. At present this at least may be said w^ith confidence — there is no proof that the group of which the type is composed is at all more capable of defeating the battleships of a hostile fleet than a group of far less costly individuals." Nevertheless, spurred on by the contractors, who love these huge jobs in ironmongery, the Admiralty goes on enlarging the size of the battleships, and has already produced the Orions, wliich, of course, " super- sede " the Dreadnoughts. 16 IV- '•■'">"■" ,<^J 41 CHAPTER III. THE NATIONAL EXPENDITURE ON THE ARMY. From 1841 until the Crimean War the expenditure upon the Army (including ordnance) remained almost stationary at about nine millions a year ; but the revenue grew rapidly with the expansion of commerce and wealth under the influence of Free-itrade, the taxes becoming at once fewer in number, less burdensome, and more productive. The Crimean War, of course, changed all this, doubling the incme-tax and leaving forty millions of debt behind it ; yet it is remarkable how much more easily we bore our share of the cost than our French allies or our Russian foes. In 1857, however, the inevitable reaction after war brought commercial failures and severe unemployment as the winter came on. The great financial question of the day was whether and how far the country should return to its ordinary peace establishments for the Army and Xavy. The original Estimates for 1856 were : Army, ;^34,998,ooo ; Navy, ;^i9,876,ooo ; but as peace was concluded in May, the actual sums spent were ;^20,8ii,ooo and ;6 13,459,000. Next year, v.hen Parliament met. Lord Palmerston and his colleagues were believed to l>e in favour of retaining the war taxes, so that they might keep military and 2A 4^ naval expenditure at a high level. Neither Europe nor Asia appeared inclined for peace, and it might have been thought that the moment was ill-suited for any movement in the direction of reduced armaments. But there were strong men in the House of Commons, and the three leading statesmen outside the Government — Lord John Russell, Mr Disraeli, and Mr Gladstone — joined hands in the struggle for economy, and undi.s- mayed by the threatening aspect of affairs in other countries, pressed their opinions with a determination and a courage which more modern statesmen seldom display. OPINIONS OF OLAD TONE AND DISRAELI. Mr Disraeli began the campaign by announcing that he would move resolutions against the continuance of war taxation. "By so doing," he said, " I think wc shall give a great impetus to salutary economy, and shall in a most significant manner express our opinion that it is not advisable that England should become what is called 'a great military nation.' " Mr Glad- stone proposed to " grapple with " the Estimates, *' not by nibbhng at them here and there, but by a general motion taking the sense of the House upon the expediency of saddling the country with such a charge." Lord John Russell quoted the precedent of 1816, when the Estimates were withdrawn and re- duced. The three statesmen carried the House with them, and their opinion was practically accepted by the Government ; for the Army and Navy Estimates of 1857 only totalled ;£^2o,699,ooo. Then came the Indian Mutiny and the China War, followed by the rising of Italy against Austria, and once more economy was banished. An invasion scare, artfully worked up and supported by Palmerston, also helped to bring up the Army Estimates to ;;^i4,97o,ooo in i860 and to ;^6oo,ooo more next year. Even Mr Gladsitone's 43 vehement opposition within the Cabinet, backed by Cobden and Bright outside, could not prevent the com- mencement of a costly and utterly futile fortification scheme financed by a loan. But this panic, like others, died down, and Mr Gladstone's influence then prevailed, with the striking- effect shown in the following figures, giving the total cost of the Army in the years 1862-5 : — £ 1862 16,854,000 1863 16,264,000 1864 14,723,000 1865 14,382,000 The great Qianccllor of the Exchequer w^as then at his best, and successive Budgets showed huge surpluses and generous remissions of taxation. As a natural consequence trade flourished, wages rose, and pauperism declined. From this time until fifteen years ago the policy of low establishments in time of peace, as expounded by Disraeli and Gladstone, was main- tained with the consent of both political parties. Then, after certain " little wars," came Lord Card- well's reorganisation of the Army, which gave in- creased efficiency at a lower cost. Moreover, they in- spired confidence, so that even the Franco-German War created no panic. A small addition to the Army was naturally made, but our military expenditure went down again to ;;^i4,729,ooo in 1873, and in 1874 to ;^ 1 4, 426,000, or a figure lower than the sum spent on the much inferior force of the sixties. These figures are surely enough to disprove the contention, now so often accepted as an axiom, that a high level of expendi- ture, when once established, cannot l>e reduced. For it was done thirty-five years ago, leaving the Army in a better and stronger condition than before ; and it can Ije done again. .\fter Mr Gladstone came Mr Disraeli, and as his name is associated with a " spirited foreign policy," 44 one would naturally expect to find a heavy inciease in the cost of niHitary establishments. But the inventor of the word Imperialism, thoiio^h he had a weakness for display, took care to provide himself with a fruj^al- minded Chancellor of the Exchequer, and for the first years of his Premiership kept the cost of the Army be- tween 13-i and 14^ millions — in fact, the two services tog-ether cost a g^ood deal less than either does now. \'arious complications, it is true, beset his Administra- tion towards the close of its existence, and produced their usual results in swollen Estimates. Nevertheless, in 1881 Mr Gladstone's second .Administration brought the cost of the Army back to ^^'14, 680,000. This, however, was the last time that the War Office con- tented itself with fourteen millions ; the gradual rise in cost for the next four years may be traced in the following table : — Army Expenditure. £ Secretary for War. 1874 13,495,000 . . Mr Gathorne Hardy 1875 13,991,000 .. 1876 14,200,000 ,. 1877 14,479,000 .. ,, „ 1878 14,281,000 .. Colonel Stanley 1879 16,945,000 .. 1880 15,025,000 . . Mr Childers 1881 14,680.000 .. 1882 15,738,800 . . Lord Hartington 1883 15,133,000 .. ,, 1884 16,095,000 .. ,, 1885 18,600,000 . . Mr W. H. Smith In more ways than one the year 1884 constitutes a turning-point in national finance. It marked the close of the old regime, instituted by Sir Robert Peel, and continued by Mr Gladstone, of frugality and financial reforms. The tariff had been reformed, but in a sense very different from that in which those words are now used ; hundreds of duties had been swept away, and the vield of the few which survived had increased enor- 45 mously. England had become the freest and cheapest market in the world, and London the commercial and banking centre of the world. The year 1884 also saw the first naval scare of modern times, ingeniously organised by Mr W. T. Stead and Mr Arnold Forster in the Pall Mall Gazette. It was much more reason- able and much less mdschievous than the stupendous mania of the last few years. Increasing expenditure and decreasing vigilance at the Treasury produced its inevitable consequences. The income-tax, after falling as low as 2d in 1875, was gradually raised to 8d, and the reduction of indirect taxation upon the comforts of the poor ceased. But the mania for war expenditure in time of peace had not yet seized the War Office in any violent form. The beginnings were modest. The Egyptian policy required an export of 6,000 men, and the military burden of India was aggravated for no particular reason by a large increase of the garrison. Many wise Anglo-Indians who shook their heads at the time, and declared that India would have been happier, stronger, and more contented if the money had been used to diminish taxes or to improve education, sanita- tion, and police. The number of men provided for in our own Army Estimates gradually rose from about 140,000 to 156,000, at which figure they stood when Sir H. Campbell-Bannerman was War Secretary — i.e., from i8f)2 to 1895. The .Army Estimates for 1886 were also introduced by Sir H. Campl>ell-Banncrman ; but Mr Gladstone's third Administration only lasted till August, and Mr W. H. Smith became War Secretary, In the autumn of 1887 a sharp contention arose between the spending departments and Lord Randolph Churchill, who as Chancellor of the Exchequer endeavoured to enforce a scheme of retrenchment in the hope of being able to provide in his Budget for a free I)reakfast-tablr. 46 His resignation was not followed by any expansion in the Army expenditure, which, indeed, after being above 18 millions in 1887 and 1888, dropped below 16 mdl- lions in 1889, and then settled down at 17 millions odd in the six following years. Here are the official figures of Army expenditure from 1886 to 1895 : — 1886 17,027,000 1887 18,429,000 1888 18,167,000 1889 15,919 000 1890 17,545,000 £ 1891 17,550,000 1892 17,258,000 1893 17,541.000 1894 17,939,000 1895 17,899,000 The end of this period saw the beginning of the new and insidious plan of " bo^r rowing for works," which ended after the war in the destruction of the Sinking Fund. The Admiralty at first was the principal offender, but in 1893 the War Office chimed in and began to borrow about half-a-million a year under the Barracks Act of 1890. FROM 1895 TO THE SOUTH AFRICAN WAR. We are now nearing an epoch of disaster in the history of our military establishment. The pre- sent dilemma of the Chancellor of the Exchequer in his search for a social service fund, the disgust of income- tax payers, the well-founded complaints of the numerous trades that were hit by war duties, the low st&te of national credit, and the scarcity of loanable capital are all traceable, in whole or in part, to the failure (or refusal) of the War Office and Admiralty to return after the war to anything like Lhe scale of expenditure which preceded the war. If Mr Haldane's Estimaites for thiis year were the same as those of Sir H. Campbell Bannerman in the spring of 1895 Mr Lloyd George could repeal the duties on sugar, coffee, and cocoa, increase the Sinking Fund, and provide without difficulty for invalidity pensions. If Mr McKenna asked for the sum that satisfied Lord 47 Spencer thirteen years ago the income-tax might stand at eightpence, and the people could enjoy a free break- fast table. Millions of capital that are being vainly consumed in piling up armaments would be restored to the channels of industry, wages would rise, employ- ment would increase, pauperism would diminish, ample funds would be set free for improving the health, physique, and intelligence of the nation. And unless Peel and Gladstone and Disraeli were extravagantly and ridiculously wrong, the real military strength of the nation and its real preparedness for war would be increased instead of being diminished by a reduction of our overgrown establishments and a return to a normal level of peace exp>enditure. As Sir William Harcourt once observed, it is positively unsafe, from the standpoint of a possible great war, to keep the instrument of taxation " at concert pitch " in ordinary times ; the strength of the nation, in war as well as in peace, depends upon the soundness of its finances. The Estimates for 1895-6 were _;;^ 17, 983, 000, an addi- tion o-f ;^97,ooo for barracks and so forth being more than counterbalanced by reductions on forage and pro- visions. But immediately after the Rosebery Govern- ment left office (in the summer of 1895) the profligate system of supplementary Estimates came into action. A supplementary Estimate for ;^7o,ooo was taken by Lord Lansdowne, the new War Secretary, in August, and another for ;^6oi,ooo was required in the follow- ing February. The actual expenditure on the Army for the year ending March 31, 1896, the first year of Lord Salisbury's Administration, was _;^i8,459,ooo, compared with ;;^i 7,899,000 in the last complete year of the Liberal Government. In the original Estimates of Sir H. Campbell-Bannerman, issued etirly in 1895, the total number of men on the establishment of the regular Army, exclusive of India, was 146,249, and the 48 total reg^ular force, including the stafl" of the auxiliary forces, the medical service, instructors, and so on, was 155,403, showing practically no change on the previous year. The vote for pay, which, of course, depends on the vote for numbers, and is usually a fair index to changes in the other Army votes, was ;^6,oo3,ooo in 1895-6, as compared with ;i^5,98i,ooo in 1894-5. The vote for militia was _^56o,ooo, for yeomanry ;^73,ooo, and for volunteers ;^824,ooo. The total vote for effec- tive services was ;^ 14,944, 200, and for non-effective services ;^3, 039,600. In the following year (1896-7) the total number of men on the home and colonial establishments, exclusive of those serving in India, was 156,174, and the pay vote amounted to ;^5,862,ooo. Owing to a supplementary vote in tlie previous year the estimate for volunteers dropped to ;^624,ooo. The yeomanry vote was unaltered. The militia was reduced to ;^548,ooo. " Transport and remounts " figures at ;^66o,ooo, and " Provisions, forage, and other supplies " at ;^2,5i9,ooo. The total net estimate was ;£'i8,o56,ooo, showing a slight increase on that of Sir H. Campbell-Bannerman, but a large reduction on the actual expenditure of 1895-6. Supplementary Estimates, however, again raised the actual above the estimated expenditure. The Esti- mates of 1897-8 may be taken as a fair indication of the peace level of expenditure before the South African War, but after a Unionist Administration with a sur- plus revenue had added a little to the establishment maintained by the Administrations of Mr Gladstone and Lord Rosebery. A new West Indies regiment was raised for a war in W'est Africa, and extra pay was provided for officers. The total force which the Govern- ment proposed to add to the Army in order to provide for its " missionary " expeditions (to borrow a phrase Vised by Mr Jesse Collings at the time) was 7,385, of 49 which number, however, only 2,590 were to be recruited during the year. The addition to re§^imental pay was estimated for the year at £77,000 ; but under Vote 7, " Provisions, forage, and other suppUes," came an in- crease of ;£"33,50o, and under Vote 8, " Cloithdng," an increase of ;^35,40o, the first sum being partially and the second wholly ascribed in the official explanaitions that accompanied the Estimates to the increasing num- bers of the Army. The total Estimates for the year were ;^i8, 140,500, showing an excess of rw>t qui'tc ;^'i 00,000 over the original Estimates for 1896-7, and a slight diminution on the realised expenditure. The following table is taken from the abstract of Army Esti- mates issued by Lord Lansdowne from the War Office on January 29, 1897 : — I. NcMBERS.— Number of men on the home and colonial estab- lishments of the Army (1897-8), exclusive of those serving in India ; — Gross estimate, 163,569 ; net estimate, 158,774. II. Effective Services 1897-8 Estimates :— £ Vote 1— Pay, &c , of Army 5,937,800 Vote 2— Medical establishment 295,800 Vote 3 — Militia, pay, bounty, &c 553,000 Vote 4 — Yeomanry, pay and allowances 76,000 Vote 5— Volunteers 627,200 Vote 6— Transport and remounts 639,000 Vote 7— Provisions 2,553,400 Vote 8-Clothing establishments 894,000 Vote 9— Warlike and other stores 2 069 200 Vote 10— Works, buildings, and staff 1,016,400 Vote 11— Education 118,600 Vote 12 — Miscellaneous 54,800 Vote 13— War Office salaiies, &c 248,600 Total effective services 15,083,800 III. NON-EFFFCTIVE SERVICES : — Vote 14— Charges for officcH, &c 1,528,800 Vote 15— Charges for men, &c 1,352,600 Vote 16— Superannuation allowanccB, &c 175,300 Total non-effective serviecfl 3,056,700 Total effective and non-iffcctive Bcrvices.. 18,140,500 This, however, was not the whole estimated expend!- 50 ture on the Arm}-, for there had to be added various items in the Civil Service Estimates, which brought up the total to ;i{5'i8,457,69i. And, further (outside the Estimates, except as regards the interest and sinking fund), there was the loan expenditure for military works, which then amounted to about a million, and was already making" heavy inroads on the Sinking Fund for the redemption of the National Debt. The Esti- mates for 1897-8 ha\e been given in detail in order to show how the last Estimates for a peace establishment before the South African War compared with this year's Estimates, which represent Mr Haldane's post helium peace establisliment. As a matter of fact, the warlike disposition of the Government in 1897 and 1898 (whdch showed itself in Ashanti, Egypt, and the North- West frontier of India) led to large supplementary Esti- mates ; and the actual expenditure for the year amounted to ;i^i 9, 528,390 if we take the figures of the War Office, or ;^i9,329,900 if we take those of the Statistical Abstract. In the following year there was more war and more expansion, so that the Army ex- penditure for the five years preceding the South African War reads as follows : — £ > £ 1894-5 17,899,800 1897-3 19,329,900 1895-6 18,459,800 , 1898-9 19,999,700 1896-7 .... 18,269,800 1 The oflioial note on the expenditure of 1897-8 ex- plains that the net increases are due " partly to the general increase of the Army and partly to special ex- penditure in connection with Egypt, South Africa, and Crete," while the note for 1898-9 states : " Transport again increased on account of the Soudan expedition and manoeuvres ; and there was additional expenditure on medical services, supplies, and stores due to the in- crease of the Army." It is beyond the limits of our present task to explain the costliness of the small wars 51 of 1897, 1898, and 1899 ; but the expansion of our mili- tary expenditure in those years \vas clearly the conse- quence of an expansionist policy at the Colonial and Foreign Offices, as well as of a gradual weakening in Treasury control. The high scale of War Office ex- penditure now is deliberate, and contrasts sharply with the pacific policy of the Foreign Office. To find, therefore, how our present peace estabhsh- ment for the Army compares with that which preceded the war in South Africa, we must take an average of the six years from 1893 to 1899, or the expenditure of 1896-7, or the Estimates of 1897-8. The swollen Army expenditure of the two years preceding the war (;^i9.329,ooo and /ri9,999,ooo) represented the be- ginnings of a new militarist and Imperialist expansion which culminated in the South African policy of Mr Chamberlain. A perfectly fair comparison of the scale which Lord Salisbury's Administration adopted before the war and of that which Mr Balfour's Administration adopted after it is afforded by contrasting the ;^i8,26o,ooo spent on the Army by Lord Lansdowne in the year ending March 31, 1897, and the /!"28,849,ooo which Mr Arnold Forster (succeeded in December, 1905, by Mr Haldane) spent on the same service in 1905-6. The difference it will be seen exceeds loi millions. If the comparison be made with the average expenditure of Sir H. Campbell-Rannerman from 1892 to 1895, the late Unionist Administrations will be found to have added about eleven millions sterling to the annual cost of the .\rmy alone on a peace footing, quite apart from the debt for wars and the debt for works. TBE SOUTH AFKIOAN WAR AND ITS LEOACT. 1899-1906. " War suspends ipso facto every lule of public thrift," wrote Mr Clladstone once out of the bitterness of experience, and " tends to sap honesty itself in the 52 use of public treasure, for which it makes such un- bounded calls." The South African War scandals still live painfully in the memory of the nation, but although the public purse was undoubtedly robbed of several millions by swindling- contracts and lost several more throu<^h the laxity and incompetence of a dis- org^anised War OlTice and of the officers and officials appointed to superintend supplies in Sou'th Africa, by far the greatest of the financial misfortunes suffered by the inhabitants of the United Kingdom is the permanent addition to unproductive expenditure. The additional charge for interest on the debt fixed and floating may be put at from four to five millions, but this has been reduced at an average rate of from ;^300,ooo to _;^40o,ooo a year during the last three years by Mr Asquith's large cancellations of debt. The addi- tion made to the burden of armaments was over four times greater, and must prove positively crushing if we should be confronted by another costly war. Between 1895-6 and 1905-6 (when so-called "normal" Esti- mates were restored) the ordinary expenditure on the Army rose by nearly lOv millions and on the Navy by over 13^ millions — i.e., 24 milions in all, representing a capital withdrawn from trade and industry of some 800 millions sterling ! — ^probably three times the total capital invested in all branches of the cotton industry in Lancashire. Yet in consequence of the ententes foreign politics are admittedly more favourable than they were. Nor has there been any movement of military expendi- ture in France, Germany, Austria, and Italy during this period to suggest the necessity for more than a very slight addition to our own in the decade under review. But how is a remedy to be found? Let us consider. Supposing it were determined tliat the 53 Army Estimates should be reduced to 25 millions next spring and to 2;^ millions in 1912, the question may fairly be asked : " How would it be done? or could it be done at all ? " Of course it could be done, and more easily than is generally supposed. A military estab- Hshment can be reduced far more readily than a civil one, because of the short service system. The annual number of recruits is very large indeed compared with the total force, and an immense waste of money and energy is involved in taking so large a number every year ; for the f>ercentage of those who have to be dismissed on physical grounds is much larger than it would be if the numbers of the Army had not been so much enlarged. The rise and fall of the Army Estimates depend mainly upon the numbers of men voted, though in order to return to the p^y vote of 1897-8 it would be necessary to vote a somewhat smaller force owing to the fact that the common soldier is rather better j>aid now than then. The following table of the numbers of regulars voted, the pay vote, and the total is extracted from War Office statements : — Vote 1. Total Pay of Army Ex- Vote A. Army. penditure. Year. Nunibera. £ £ 1896-7 156.174 .. 5.996 827 .. 18156,520 1901-2 450,000 .. 22.573,953 .. 92.660,874 1903-4 235.761 .. 11,233.931 .. 36,728,618 1904-5 227,000 .. 10,521.393 .. 28.895.624 1905-G 221,300 .. 9.844,833 .. 28,478,863 1906 7 204,100 .. 9,611,566 .. 28.501,421 1907-8 190,000 .. 9.421,235 .. 27.141,642 1908-9 185.000 . . 9,028.383 . . 26,859.299 19C9-10 (eBtiinatc) .... 183,200 . . 8,527,000 . . 27.435,000 1910-11 (oHtimatc) .... 184,200 .. 8.733,000 .. 27.760.000 Ihe above table brings out very plainly how it is that 54 the Army cost 50 per cent, more after the war than it did before the war. Instead of reducing the war estab- lishment by 300,000 men the Government reduced it by 214,^39, leaving the hard-pressed taxpayer to provide for more soldiers than before. These additional men cost seven or eight millions sterling a year, so that there is no longer any mystery about the necessity for keeping on war taxes. If Parliament allows war estab- lishments in time of peace it must, of course, acquiesce in war taxation. Unfortunately, another criticism that is forced upon one by an examination of these figures is that the taxpayers have been deprived by Mr Haldane of the greater part of the benefits which they should have received from the reductions that have taken place. The policy of making things pleasant all round agrees ill with the character for frugality which Mr Haldane has sometimes claimed for himself. Mr Haldane is certainly the first Secretary of War who has succeeded in reducing the establishment by 37,000 men without making any substantial reduction in the pay vote. We should have expected, if ordinary economy had been observed, or even ordinar}- War Office economy, that a reduction of 37,000 in the regular Army would have been accompanied by a reduction of _;^3,ooo,ooo in the Estimates. The actual sum gained by the tax- payer, if this year's Estimates are compared with the expenditure of five years ago, is a paltry ;^7i8,ooo. It is unfortunate for purposes of comparison that five years ago several of tlie votes were rearranged, so that the Army expenditure of ten years ago cannot be com- pared in every detail with the present. But perhaps the financial staff of the \^'ar Office will find time before 55 long to make good their preliminary table. However, some of the main items can be set out : — Lord Lansdowne's Mr Haldane's Mr Haldaue's Army Army Army Expenditure Estimatea Estimates in 1896-7. 1909-10. 1910-11. 1 . Total £18,156,520 . . £27,435,000 . . £27,760,000 2. Numbers of regular army 156,174 .. 183,200 .. 184,200 3. Pay vote £5,995,827 .. £8,527,000 .. £8,733,000 4. Special Reserves .... 533,902 . . 897,000 . . 833,000 5. Territorial forces.... 885,952 .. 2,307,000 .. 2,660,000 6. Supplies and clothing 3,377,709 .. 4,275,000 .. 4,397,000 7. Works 980,748 .. 2,551,000 .. 2,598,000 8. War Office 243,037 .. 593,000 .. 429,000 The increase in the Works \'otc is due to the abolition of the loan system, A CEITICISM OF THE AKMY ESTIMATES. On the face of it, last year's Army Estimates of ;^27, 435, coo showed a petty decrease of _;^24,ooo, as compared witli the Estimates of 1908-9. There was, however, a real increase of no less than ;;^276,ooo, although it fell upon the Indian instead of upon the British taxpayer. The principal additions to mihtary exF>enditure made by Mr Haldane were in 1910-11 ^353,000 for the Territorial Force, ;^'2o6,ooo for pay, cL cetera, of the Army, and ;^i 22,000 for supplies and clothing. Unhappily, the vicious system of borrowing for works, though " definitely aban- doned in 1906," has been continued on a small scale, as the increase of loan annuities testifies. This year's Estimates are ;^325,ooo above lasit year's, owing to an incrca.se in the Regular Army and in the cost of the Volunteers, now called "Territorials." This year, however, a charge of ;^30o,ooo for intere.st and sinking fund under the Barrack Act of i8go will be terminated. Let us hope that it will not be used ])}' Mr Haldane or his successor for further military 5^^ exjtravag"ance, but that ihe taxpayer for once will be allowed to benefit. It is very pleasant indeed for the head of a Government Department to give money and subventions to everybody who asks for more. But, unfortunately, this policy of donations ruins the Budget, and bears very hardly upon the poor. A fine ladv once called on Xecker, then Finance Minister to Louis XVI., and asked him to give her i,ooo crowns from the public Treasury. When Neckcr refused, his visitor was hurt, and asked, in as-tonishmenit, " What can a thousand crowns be to the King? " " Madam," replied Xecker, " a thousand crowns are the taxes of a whole village." In allowing all departments to draw more money from the taxpayer's purse at one and the same time our Ministers seemingly have forgotten a sayiing of Lord Bacon : — " A man had need, if he be plentiful in some kind of expense, to be as saving again in some other ; as if he be plentiful in diet, to be saving in apparel ; if he be plentiful in the hall, to be saving in the stable, and the like. For he that is plentiful in ex- ]>enses of all kinds will hardly be preserved from decay." The Army Estimates are above eight millions higher than those of 1899. The remedy is qu'te well known. In the first place, Mr Haldane and his military ad\isers c'lssure us that the additional million and a-half which we are spending on the Territorials is giving us an efficient force of 270,000 men for home defence. If that is so, there can be no possible reason for maiuitaining the numbers of the Regular .Army at home at their present level. For if the Territorials are efficient, why should we not replace a part of the Regular .\rmy at home by Territorials? They cost much less, so that we could thereby effect a great economy w'ithout any loss of security. If, on the other hand, the Territorials are not efficient, the money being spcDt on them is 57 mere waste. A second and a more obvious remedy is in the reduction of the South African garrison. Two years ag-o, " lookinq- to the future," Mr HaWaiic wrote, " it is, I am convinced, impossible to make further diminutions in Army expenditure on a considerable scale unless we firsit of all reduce the number of troops serving- abroad." Last year's reductions in the South African garrison saved something, and, as the Muncliester Guardian points out, there are still 11,390 men in South Africa, made up of four regiments of cavalry, two batteries of artil- lery, siK battalions of infantry, with engineers and army medical corps. We agree with our Xorthcrn contemporary that the first thing' economists in the House of Commons should do is to call for an e.9timate of what it is costing- to keep these troops in South Africa. The Manchester Guardian's critic, who gene- rally errs on the rig'ht side — the side of moderation and caution — puts the normal cost of a battalion at home at ;^6o,ooo, and allows 20 per cent, for the extra cost of maintenance in .South Africa, where living is very expensive. He proceeds : — Taking the troops now in South Africa as the equivalent of 10 battalions, we get a total cost of about three-quarters of a million. It cannot be pretended that these men are any longer necessary to the protection of .South Africa, and if they were necessary to the home army we could not have afforded to keep them so long in South Africa. There is therefore no reason why these battalions, if withdrawn from South Africa, should not disappear from the establishment altogether. But this is not the end of the economy which might be effected, and ought, in our opinion, to be effected, in the coming financial )ear. As to this, Mr Haldane's own words last year may be quoted : — It is in the operations of the Cardwell system that the best 58 hopes of future economies will be found to exist. For when once a balance between units at home and abroad has been arrived at, any future reductions that can be effected abroad should give a double saving. In so far as such reductions are rendered possible owing to a certain amount of external pressure being removed or to the rise of new protective forces within the Empire itself, the same causes that led to the strength of the Imperial outpost line being diminished may reasonably be held to justify a corresponding reduction being made in the strength of the Im{:>€rial reserve. Translating- Mr Haldanc's lanj^uag^e into a practi- cal dialect, we can, by di.sbandinjjf these unnecessary ten battalioms from South Africa, effect al.so an equiva- lent reduction in our home Army. As the above-quoted critic puts it: — "Ten battalions saved in South Africa would thus be twenty battalions saved in all. In addition to the three-quarters of a million saved on the equivalent of ten battalions in South Africa, we should save the cost of their ten linked battaJions at home. Here, then, on Mr Haldane's own showing, is a way in which more than a million and a-quanter of money could be saved on next year's Estima/tes. All the conditions are fulfilled. The balance between home and foreign battalions is now secured, and therefore the ' double saving ' of which Mr Haldane speaks should begin to operate." There is no more reason now for keeping a large garrison in South Africa than for keeping one in Canada. Xot only are all the South African colonies once more enjoying full self- Government, but their unification has been effected into one great State, which is naturally concerned to guard and police its own territories, like Aus-traha, New Zealand, and Canada. We would, therefore, sug- gest to the economists in the House of Commons that they should concentrate all their energies upon the South African garrison, which shouJd be the first line of criticism on next year's Army Estimates. Mr Haldane has himself invited this criticism, and it ought 59 to be pressed unsparingly to a successful issue, and with all the more determinatdon in view of the Govern- ment's enormous additions to the Xavy. AEMY VOTES-COWAKATIVE TABLES- The following- statement shows the net expenditure in the Army by votes in 1897-8 and 1898-99, the two years preceding the war in South Africa : — Year. 1897-8. 1898-9. Vote A. Numbers. Vote I. ] Vote II, | Vote III. Militia. Pay, Ac, of the Army. 158,774 180,513 £ 5 981,399 5,980.229 Medical Services. Vote IV. Vote V. Imperial I Volun- Yeo- j teer manry. Corps. £ 301,841 330.910 £ 538,004 546.965 £ \ 75,521 I 76,488 £ 888,641 872,616 Year. Vote VI. Trsnsport and Remounts. Vote VII. Supplies. Vote VIII. 1 Clothing. Vote IX. Warlike and Other Stores. Vote X. Works. Vote XI. , Educa- tional Estab- lishments. 1897-8.... 1898-9. . . . £ 886,125 989.382 f 2,8-^2,722 3,281.266 ; £ 1,147,297 ! 1,135,858 £ 2,298,027 2,426,344 £ 1,114,621 1,002,957 £ 115,842 ; 113,804 Year. 18S7-8. 1898-9. Vote XII. £ 59.287, 54.650. Vote XIU. War Office. £ 245,123 243,037 VoteXIV.I Vote XV. Non- Effective Cbarges— Officers. £ 1,527.045 1.527,854 Non- Effective Charges— N.C.O.'s and Men. Vote XVI Superan- nuation, &c., Allow- ances. Losses Irre- cover- able. £ 1,338,699 1.327.272 £ 177,957 183,501 £ 238 240 Total. £ 9,528,390 20,096,373 The following are the official notes on these two years: — (1) 1897-8.— Net increase on expenditure for 1896-7, £1,371,870, mainly in respect of tranFport, Bupplius. clothing, warlike stores, and works. Due partly to the general increase of the Army and partly to special expenditure in con- nection with Egjpt, Houili Africa, and Crete. (2) 1898 9.— Net increase on expenditure for 1897-8, £567,983. Transport again increased, on account of the Sudan Kxpcilition and Manreuvrcs, and there was additional ezpf'nditure on medical services, supplies, and stores, due to the iucrea»e of the Army. In 1905 the votes were re-arranged to some extent, and again in 1908. The following table gives the net 6o expenditure on the Army by votes after the war from the vcar.s 1905-6 to 1907-8 : — Year. Vote A. Numbers. Vote I. Pay, &c., of the Army. Vote II. Medical Services. Vote III. Vote IV. 1 Imperial Militia. Yeo- [ manry. VoteV. Volunteer Corps. 1905 6 221,300, £ 9,844,833 £ 456,495 £ ' 750,837 £ 397,396 406,056 407,108 £ 1,220,614 1906-7 1907-8 204,100 190,000 9,611,566 9,421,235 445,123 440,686 777,873 727,943 1,652,802 1,487,051 Year. Vote VI. Quarter- ing Trans- port & Re- mounts. Vote VII. Supplies and Clothing. ^l^l VOTE IX. Ordnance Anna- Estab- ments & lishments Engineer Si. General Stores. Stores. Vote X. Works. Vote XI. Educa- tional Estab- lishments 1905.6 £ 2,002,721 1,960,236 1,749,655 £ 4,214,777 4,220,434 £ £ 715,911 2,388,134 646,225 2,176,571 £ 2,174,437 2,255,690 2,351,775 £ 122.961 1906-7 134, S23 190T-8 3,944,731 518,979 1,683,866 137,781 Year. Vote Vote XII. XIII. ^" la- "3 3 E 5 c *= « © ^< ^1 iir 1 Vote XIV. Non- Effective Charges- Officers. Vote XV. Non- Effective Charges— NC.O.'s and Men. Vote XVI. Super- annua- tion, &c., Allow- ances. 3 Total, 1906-6 £ 1 £ 64,089 548,937 £ 1,665,403 £ 1,714,453 1,716,745 1,756,178 £ 187,428 £ 9,437 £ 28,478,?€3 l»C€-7 1907-8 72,609 "^54,771 67,6971 563,959 1,673,436 1,703,172 182,855 172,528 4,106 7,298 28,^.01,421 27,141,642 The following are the official notes on these years : — (1) 1905-6.— Reduction on noniial expenditure of 1904-5, £4,000. Savings due to reduced Colonial Infantry establisnments, disbandment of Garrison Regi- ment, d-c, utilisation of more surplus clothing, and completion in 1904-5 of " Mowatt " reserves of stores, balanced by expenditure of £1,478,000 on re- armament of Horse and Field Artillery and growth of charges for Service Pay, Army Reserve, Loan annuities, and non-efleotive services. (2) 1906-7. -Increase on expenditure of 1905-6, £22 000. Savings by reduction of establishments and decreased expenditure on Artillery Rearmament (£1,012,000), balanced by payment (£439,0OOt, for redemption of loans to Volunteer Corps for Drill Halls and Ranges, increase of Army Reserve and expenditure on Rifles, and growth of charges for Loan Annuities. (3) 1907-8.— Reduction on expenditure of 1906-7, £1,359,779. Savings by Redaction of Establishments, decreased expenditure on Artillery Rearmament (£502.943), Militia and Volunteers; partly balanced by increases under Army Reserve, Works, and non-effective charges. £363,770 spent on extinction of Volunteer Debts, (Supplementary Estimate.) 6i The following table gives the Army expenditure for 1908-9 and the Estimates for 1909-10 and 1910-11 by votes : — Year. ■ Vote A. , Vote I. } 1 Pay, &c., Numbers.' of the I Army. 1908-9 : 185,000 1909-10-E8timate . 183,200 1910-11— Estimate . 184,200 £ 9,028,383 8,527,000 8,733,000 Vote II. Vote III. VotiIV Medical ' Special Services. ! Reserves. Terri- torial Forces. 438,311 440,000 452,000 VOTB VI. Quarter 'g Tr'nsport and Rem'nnkB £ £ £ 861,082 '2,243,384 1,666,210 897,000 1 2,307,0001 1,665,000 833,000 2 660,000 1,589,000 Year, VoTEVn. I Supplies I and ' Clothing. 1908 9 1 3,805,716 1909-10-Estimate' 4,275,000 1910.11-Estimate' 4^7,000 Vote VIU. Ordnance Estabts. & General Stores. Vote IX. i Vote X. I Arma- ; ments 4 Works Engineerl ^''°^^^- Stores. ' £ I £ , £ 478,990 I 1,504,688 2,339,838 535,000 ' 1,644,000 2,551,000 533,000 I 1,482,000 2,598,000 VoT« V. Educa- tional Estab- lishm'nts. £ 134,946 146,000 147,000 Vote XI. o o £ 67,279 67,000 74,000 IVOTE XU. War T«u. Office and Army Accounts Depart- ments. Vote XIII. Non- Effective Charges- Officers. Vote XIV. Non- Efleotive Charges— N.C.O.'s and Men. Vote XV. Superan- nuation, Ac, Allow- ances. £ 165.596 158,000 154,000 Losses Irre- Total. cover- able. 1 £ 1908-9 i.74,317 £ 1.736,248 1,762,000 1,789,000 £ 1,813,894 1,868,000 1,890.000 £ £ 417 26,859,299 1909-10-Estimte 593.000 1910-ll-E8tim't€ 429,000 27,435,000 27,760,000 The following are the official notes on the above figures : — (1) 1908-9.— Reduction on Expenditure of 1907-8, £282,343. Savings by Reduc- tion of EbtablishmentB, completion of Horse and Field Artillery Rearmament, reducf d working stocks of stores, and increased Indian Capitation Payment ; partly balanced by increase on Army Reserve and pensions, initial charges for Special Reet-rveand Territorial Force, and conversion of tleld guns to quiok- Iring for Territorial Artillery. (2» 1909-10.— Net reduction on Estimates, 1908-9, £24,000. Decrease due to Reduction of Establishments and other KuvinRs on witlidrawal of units from 8. Africa and to increased Indian contribution ; balanced by increased expendi- ture on Territorial Force, new field howitzcr.i and pensions. (3) 191011— Net increa.se on Estimates, 1909 10, £3i5,000. Due to increase of Regular KHtablighnicnt (1,000 men), growth of Territorial Force, increase on Field TraioinK (£100.000), and on clothioR (owinR to i>artinl exhaustion of surplus stocks); partly balanced by rcdaccd provihion for Army Reserve and for new field howitzers. 62 EtPLAMiTiONB of the DiFPKRBKCES between the Ncmbebs and Amounts in the Army Estimates for 1910-11 and 1909-10. Vote A.— Ncmbehs: Increase 1,000. 1909-10. Total of Vote A 183,200 Less additional numbers to cover temporary and oocasional excess of establishment . . 1,300 181,900 Real reduction . 1910-11. 184,200 1,850 182,350 450 The following are the principal variations :- — Offic'rs. Warrant Officers Serjeants J>^-%^ Rank & File. All R'nk« Increases: Cavalry of the Line. . Royal Engineers .... - 15 5 - 1 - '2 - 40 12 5 - 16 1 - 5 366 181 136 295 197 1.35 1 Decreases: Army Service Corps. . — 11 - 2 - 23 - 20 683 637 50 16 .. 41 107 - 11 - 52 - 39 - 20 642 520 Other changes yield a net decrease of 70. Vote 1.— Pay, &e., ok the Army.— Increase, £206,000. As £161,200 haa been transferred from Vote 12 for pay, Ac, of the Army Pay Department and Coi-ps, the real increase is £44,800. This increase is due to increased provision for field training and to diminished appropriations in aid, partly balanced by reduced charges for soldiers' gratuities and deferred pay. Vote 3.— Special Reserves.— Decrease, £64,000. Due to a reduction in the strength of the force provided for as compared with 1909-10, and in the average number of recruits drilling durius the year, partly balanced by increased pro- vision for the Officers' Training Corps. Vote 4. — Terbitorial Forces.— Increase, £353,000. Due to the growth of the Territorial Force and the formation of the Territorial Reserve. Vote 6.— Qcveterino, Thansport. and Remoukts.— Decrease, £76,000' Due to a decrease in the provision for lodging allowances, sea transport of troops, carriage of stores, and purchase of horses, partly balanced by a larger provision for mechanical transport vehicles. Vote 7.— Sl-ppmes and Clothikg.— Increase, £122,000. Due to the partial exhaustion of surplus stocks of clothing. Vote 9.— Ar.mamexts and Engineer Stores.— Decrease, £162,000. Due to decreased provision required to complete the supply of new pattern howitzers, and to reduced requirements of rifles. Vote 10. — Works and Buildings.— Increase, £47,000. Due to increased provision for new barrack services on the vote. Vote 12. — War Office.— Decrease, £164,000. Due mainly to the transfer to Vote 1 of provision for the Army Pay Department and Corps, on reorganisation of the Army Accounts Department. Votes 13-15.— Non-effective Services.— Increase, £45,000. Due mainly to the normal growth of the charge for Retired Pay and for pensions. 63 CHAPTER IV. THE GROWTH OF CIVIL EXPENDITURE. Together with this portentous growth of expenditure upon the Army and Navy the cdvil expenditure of itlie country has also been growing at a dangerous rate. It is high time to raise tiie question whether the usefulness of the numerous Government departments has increased in proportion to this expenditure. There are an enormous number of faddists and busy- bodies whose principal idea in the leisure which they devote to mankind is to get grants of money from public bodies or Government for their own particular projects and fads. If they are unsuccessful they fill the newspapers with wails and complaints, and denounce the Ministers or Town Councillors whom they have unsuccessfully pestered as mean, stingy, and unen- lightened, wholly wanting in humanity and public spirit. If they succeed they pose and are frequently treated as public benefactors. They receive perhaps a knighthood, and the service they have rendered to one section of the community at the expense of everybody is immediately entered in WJio's Who, and eventually inscribed on a tablet. Of course, all expenditure is popular with somebody. When a man makes a gift out of his own pocket it would be churlish to look the gift horse in the mouth. The rich may spend a great deal on luxuries and ostentation without incurring any moral censorship. But administrators of public money hold the most solemn and responsible of all trustee- ships. If an expenditure is not absolutely necessary its utility and productive character must be proved to demonstration, and it must also be shown that the scheme can be carried out without imposing an undue 64 strain upon the public credit and resources. Great Britain may be the richest country in the world. But no State is nich except by comparison with the greater poverty of its neighbours. Nine families out of ten are poor. Mosit of them, but not all, have just enough to live on. But their savings arc very small, and they have very little to fall back upon. The tenth famjly is very comfortably off, on the average, and if this "emerged " tenth were able and willing to provide the whole revenue a Government might almost be pardoned if it extended the scope of its functions and enlarged its graats liberally. But ;ipart from the political evils which would flourish in a State sup- ported only by a small well-to-do fraction of its citizens, a modern State, with an elaborate system of education, an enormously costly arrangement for the incarceration of criminals, lunatics, and paupers, immense forces of police in addition to a mighty machinery designed and maintained regardless of expense for the purpose of menacing the security of other nations and safeguard- ing its own, cannot possibly rely upon the rich alone. As we have already seen, the cost of the Civil Service has increased even more rapidly than that of the Army or the Navy, the figures for the last 50 yeans being as follows : — Civil Service, in- cluding Other Consolidated Fund Services. £ 10,147,000 11,194,000 15,624,000 19,852,000 23,446,0C0 32,152,000 34.007,109 40,6i3.000 42,686,000 1857-8 1867-8 1877-8 1887-8 1837-8 1907-8 1908-9 1909-10 1910-11 (estimate) Revenue DepartmentB and Post Office. £ 4,359,000 4,883,000 7,776,000 10,749,000 14,310,000 20,749,000 21,433,000 22,035,000 23,852,000 65 There has thus been a steady increase in the burden of the Civil Service from 1857 to 1897, and in the next 12 years of 'the rtable an increase of more than 19 m.il- Hons, or, mcluding- the revenue departments, which are grouped with the Cixiil Service Estimates, an increase from ;^37, 756, 000 to ;^'66, 538,000. In the last two fiscal years the increase is swollen by the cost of old- ag-e pensions, which amounted to 8f millions in 1909- 10, and is estimated to cosit 9J miUions in tihe current year. Apart from this charg-e, civil expenditure amounts to over 57 millions, an increase of nearly 50 per cent, compared with 1897. The above figures are larger than the sums an.n'ually provided by Parliamenrt, for tJiey include considerable sums spenit under the auithority of various permanent Acts. Tihese are the " Other Con- solidated Fund Charges." They include provi&ioin for the Sovereign's Civil List, for the salaries and pensions of the judges, and various other charges. Apart from two or three pensions for distinguished military or naval services, the whole of this expenditure, which amounts to nearly two millions sterling every year, is oivil in character. The figures are as follows : — Other Consolidated Fund Charges. £ 1897-8 •1,886,000 1910-11 (estimate) 1,646,000 • This figure is swollen by a charge of £250.000 for expenses under the Coinage Acts 1891 and 1893. It is unfortunate that these charges are not dis- cus.sed with the Civil Service Estimates, but at present no estimate of the Consolidated Fund Charges is laid before Parliament except in the Budget statement of the Chancellor of the Exchequer. This is one of the weak points in the financial control exercised by the House of Commons. Several of these charges would certainly be criticised if memlK:rs gcncralJy were aware 3 66 of their existence, and thougih none of them can be repudiated, many of them lapse in the ordinary course of nature, and their renewal might be prevented. We have not, however, reached the Hrndt of civil expendiiture. A large item consists of the revenue de- rived from certain taxes which are earmarked for the benefit of the local authoriliies in whose areas they are collected. These taxes are imposed by the authority of Parliament ; they are collected by officials under the conitrol of Parliament, and their distribution should properly be treated as Imperial expenditure. These assigned taxeis do not, however, constitute the whole of the Imperial subsidy to local needs. In addition, grants amounting to over a million sterling are paid oiut of the Consolidated Fund on the fulfilment of cer- tain conditions by the various local bodies. Taking these two classes of local contributions together, we obtain the following figures as the total payment from the Imperial taxes to local finance : — £ 1897-8 9,402,000 1910-11 (estimate) *10,745,000 * From January 1, 1909, the collection of dog, gun, game, and establishment licences in England and Wales was transferred to the local authorities. Ln these various tables we have all the items of civil expendiiture. Putting them together w-e get the follow- ing summary : — Total Civil Expenditure of the United Kingdom. £ 1897-8 47,158,000 1910-11 (estimate) 77,283,000 In view of this result, it is no exaggeration to say that the growth of civil expenditure is at least as serious as the growth of military and naval expendi- ture. In a period of twelve years our civil expenditure has increased by nearly 66 per cent., and the actual 67 addition made is the huge sum of ;^30, 000,000 a year. What that means to the taxpayer can bes.t be made clear by pointing out that if tliis additional expenditure had not been incurred, the Chancellor of the Exchequer would to-day be in a position entirely to abolish the sugar tax and the tea tax and to reduce everybody's income-tax by approximately 8d in the J^. COMPAEISON OF EXPENBITirRE IN 1897 AND 1907 WITH ESTIMATES FOR 1910-11. In order to see where the increase has occurred in these figures it is proposed to analyse the sums which have been quoted. The analysis follows the clas'sifica- tion of the Appropriation Accounts as far as possible, for though the form in which these accounts are drawn up makes it difficult to separate the cost of the various departments — for many appear under more than oine head — it would be impossible to rearrange the details of the two large volumes. The account is further confused by the appropriations in aid which accrue to many of the departments. These are in the nature of County Court fees, proceeds of sale of stores, &c. , the money sometimes being paid by the public and some- times by other Government departments. The appro- priation accounts quote the gross expenditure and also the appropriations in aid received under each head. The difference between these represents the sum to be provided by Parliament, and is to some extent com- parable with the Estimates for the present year, though the latter will inevitably be added to later in the Session by the supplementary Estimates, which have unhappily become a regular feature in the spring Se.ssion of Parliament. The increase shown in 1910-11 has to be increased by ;^369,ooo on account of supple- mentary expenditure already brought before Parliament 68 iin supplementary votes passed prior to the summer rece.'^s : — Summary. 1897-8. 1907-8. Estimates, 1910-11. I. Public Works & Buildings II. Salaries and Expenees of Civil Departments .... III. Law and Justice IV. Education, Science, & Art V. Foreign&Oolonial Services VI. Non Effective and Charit- able Services £ 1,888,680 2,097,932 3,628,681 11,525,818 1,160,212 747,639 355,859 14,265,009 £ 2,716,400 2,886,564 3,854,402 17,163,278 2,042,364 810,377 512 707 20 843,581 £ 3,452,294 3 455,545 4,442.611 18,651,483 1,862,190 10,073,049 VII. Miscellaneous 748,274 VIII. Eevenue Departments . . 23,382,656 Total 35,669,830 50,829,673 66,068,102 Total (excluding Eevenue Depart- ments) 21,404,821 29,986,092 42 685,446 Of this increase gj millions is in respect of Oid-Age Pensions, whiich lappears under the sixth heading-. But apart from this item there are some conisiderable ad- vances. As between 1897 and 1907, the largest in- creases are in Education and the Revenue Departments, wh'ioh between them account for 12 millions of the 15 miillions increase. Other items to which attention should be diirected are those in respect of pubJiic build- ings, \Vhich sJiow an increase of nearly 50 per cent., the expenses proper of the civiil departments, which have risen 47 per cent., the cost of the Colonial and Foreign Services and Miscellaneous expenses. These are given below in detailed tables, w^hich will enable the reader to put his finger on the spots where expendi- ture has grown at an excessive rate. PITBLIC WORKS AND BUILDINGS. The first class is that of public works and buildings. Many of these iteans are for departments which figure in the returns elsewhere. The Post Office buildings, for example, which account for a large proportion of 69 the increase in recent years, and for ;^ioo,ooo of the anticipated increase in the Estimates, are so divorced from the other accounts of that Department that it is impossible to get a general review of its financial position. It is hardly to be wondered that it can show a profit when its building-s are paid for out of the nation's revenue, and no charg-e is made against its receipts on account of capital expended in buildings, as would be the case with a trading company. But there seems to be great and growing extravagance in public buildings, the Estimates for the current year showing an increase over 1907 of a quarter of a million sterling. A further sum of ;£^i3 1,800 is being asked for the Labour Exchanges that are being erected all oAcr the country. Class I. — Public Works and Buildings. Royal Parks and Pleasure Gardens. . . . Diplomatic and Consular Buildings . . Revenue Department Buildings, Great Britain Public Buildings (Great Britain) .... Labour Exchange Buildings Surveys of the United Kingdom Rates en Government Property Public Works and Buildings (Ireland). Railways (Ireland) Total (including other public buildings) 1897-8. £ 101,323 23,402 345,782 284,625 204,585 394,743! 195,0581 89,890' 1907-8. £ 139,972 71,867 624,024 504,340 189,569 624,251 171,454 59,411 1,888.68012,716,400 Estl- nintfis^, 13i0 11. £ 127,800 101,700 735,800 725,600 131,800 192,796 675,700 259.804 87,114 3,452,294 The entry for rates on Government property shows an increase out of proportion to the sum spent on build- ings, but it has to be remembered that Government property has increased in every one of the intermediate years. It may be pleaded that Great Britain is not lavish in its public buildings compared with some other countries, and in the case of the Government 4 70 Departments efficiency has sometimes suffered from inadequate housing- and the scattered location of inter- dependent oflices, and sometimes even of branches of the same department. Nevertheless, the idea that every civil servant must live in a palace has been sadly overdone. SALARIES AND EXPENSES OF CIVIL DEPAKTMENTS, The second group contains the expenditure of Llie Administrative Departments. The three and a-half mil- lions voted under this head are, in fact, the cost of running the permanent Civil Service, and those who hold with the dictum that the best Government is that which spends most lavishly would probably find the chief outlet for their spendthrift propensities in a great addition to this sum. Every fresh form of Govern- ment activity, every new department created, means an addition to the cost of these civiil departments, and, as will be seen from the subjoined table, the total ex- penditure has increased by nearly 75 per cent, in the 12 years covered by the figures : — Class II. — SAiiAEiKS and Expenses of Civiij Depabtiients. Sebvice. House of Lords Offices House of Commons Offices Treasury and Subordinate De partments Home Office Foreign Office Colonial Office Privy Council Office , Board of Trade Mercantile Services Bankruptcy Department of Board of Trade Board of Agriculture and Fisheries Charity Commission Estimate 1897-8. 1907-8. for 1910-11. (Net). £ 3,897 16,516 £ 19,951 35,250 £ 28,443 49,300 89,187 118,279 70,852 41,911 11,821 178,674 44,215 99,473 194,930 62,877 62,629 10,160 269,006 92,634 106,403 224,078 67,562 58,300 10,509 449,990 105,652 8 185,710 29,802 103,714 40,232 235,853 30,261 7' Service. Ci%-il Service Commission Exchequer and Audit Depart- ment Friendly Societies Registry .... Local Government Board Lunacy Commission (England)..' Mint (including Coinage) National Debt Office i Public Record Office j Public Works Loan Commission; Registrar General's Office (Eng- land) I Stationery and Printing Office of Woods, Forests, and Land Revenue Office of Works and Public | Buildings Secret Service Scotland — Office of the Secretary for Scot- land Fishery Board for Scotland . . . . | Lunacy Commission, Scotland.. Registrar General's Office, Scot-j land Local Government Board for Scotland Ireland — Household of the Lord-Lieu- tenant of Ireland Chief Secretary for Ireland Department of Agriculture and Technical Instruction, Ireland Charitable Donations and Be- quests Office, Ireland Local Government Board, Ire- land Public Record Office, Ireland .. Public Works Office, Ireland . Registrar-General's Office, Ire- land Valuation and Boundary Survey, Ireland 1897-8. £40,183 58,866 7.514 181,575 13,828 13,702 22,465 1,795 38,665 580,639 19,456 54,427 25,825 11,942 30,476 5,360 4,964 11,375 4 770 41,539 1,872 136,804 5,771 36,414 15,784 12,623 2,097,932 1907-8. £37,679 61,652 8,513 226,179 15,782 12,356 24,189 1,390 38,302 736,875 20,046 85,290 43,877 34,916 17,419 6,130 3,895 15,768 4,557 27,051 201,229 2,025 71,274 5 456 39,276 11,933 19,481 2,886,564 Estimate for 1910-11. (Net). £38,061 63,400 9,469 271,849 16,604 38 14,091 26,095 66 47,001 739,596 22134 105,610 50.000 35,802 24,301 6,503 5,214 19,190 4,672 30,038 416,356 2,057 102,447 7,221 44,007 13,099 24.867 3,455,499 73 The Estimates of £t,8 for the Mint and £^ for the Bankruptcy Department of the Board of Trade are included so as to bring the departments befoo-e the House of Commons. As regards England, it will be seen that large increases are recorded in the case of the Board of Agriculture, the Local Government Board, the Stationary Office, the Mercantile Service, and, in particular, in the Board of Trade. Between them these offices are responsible for the expenditure of over three- quarters of a mallion sterling more than in 1897-8. In the case of the Board of Agriculture the Estimate shows a decrease, but the department has in the year 1907 included a supplementery Estimate of ;^ioo,ooo as a grant in aid on small holdings account. The Home Office has had to add greatly to its staff on account oi the work put upon it by recent Factory and Workshops Acts and other industrial legislation. A comparison of the two years with regard to factory inspection yields the following result : — 1910-11. 1897-8. 1907-8. (Estimate) Inspection of factories and work- £ £ £ shops — Salaries, &c 30,078 .. 55,272 .. 67,937 Travelling, &c 9,212 . . 12,352 . . 15,000 Feeg to surgeons, &c 3,396 . . 9,703 . . 9,500 Cost of prosecutions, inquiries, and arbitration 674 . . 3,104 . , 4,000 Incidental expenses 757 . . 976 . . 1,000 52117 .. 81,407 .. 97,437 The remainder of the increase is due to contributions towards the maintenance of certified inebriates' re- formatories under the Act of 1898 and a sum of _;^ 1 2, 740 — the cost of the Aliens Act of 1906 — ;^9,850 being the salaries, fees, and allowances to officers. In view of the admitted failure of the Aliens Act as a real safeguard against the admission of undesirable persons, it would seem that ;^i3,ooo 73 is a larg-e sum to pay to keep out a few innocen;t but poor refugees. It would really be cheaper to pension the few persons who are forbidden to enter the country. The increase in the Local Government Board Vote is incurred in respect of the general staff and of the district auditors. The increase in the salaries of the latter g^entlemen is, however, well spent if they keep an adequate watch over the expenditure of local authori- ties, for the sums which come under their superxiision are on a much larg-er scale than the ,5^64, ooo which constitute their wages. As regards the Board of Trade, which shows the largest increase of all the de- partmemts, the additional expvenditure in 1907-8 is to be sought for in two departments — viz., the Com- mercial, Labour, and Statistical Department, and the Patent Office. Since the first fiscal inquiry, initiated by Mr Balfour, the Board of Trade has been engaged on a series of important investiga- ■ tions, and has enlarged its statistical functions to meet the demand for more information on the leading social and economic questions of the day. The cost of this development increased the sum spent by the Labour Department from ;^i9,ooo to ;^47,5oo. The Patent Office also showed an increase owing to the greater trouble taken in the investigation and recording of patents. Salaries and wages in this department rose in the ten years from ;^57,ooo to ;^i 10,000. The enormous increase in the Estimate for the current year is chiefly due to Labour Exchanges, which require nearly ;^i3o,ooo. The Board of Trade Estimate also includes the cost of the Census of Production Office, the expenditure of which is, however, difficult to separate from the general expenditure of the Board. Whether the census was worth undertaking seems quite arguable. There arc limits to expenditure upon even such fascinating objects as statis'tics. 74 The Civil Service Departments of Ireland and Scot- land naturally show smaller advances. The most im- portant of the sums is that for the Agricultural Board of Ireland. Over ;^4oo,ooo is to be spent by the department in the coming year, but the work which has been done in arresting Ireland's agricultural de- cline and improving: the trade outlook for the future is a more productive undertaking- than many which could show a credit balance in their account. There is an increase of ;^ig,ooo for the departmental work in the current estimate, while ;^ 163. 750 is paid to the Congested Dist riots Board. LiW, JUSTICE AND POLICE, The third class includes expenditure on law and justice, so far as this comes within the province of the central administration. It is of some interest to note how the increase in this section, which amounts to about ;^8i4,ooo, is distributed among the three kingdoms : — Estimate, 1897-8. 19078. 1910-11. £ £ £ England 1,378,326 .. 1,509,100 .. 1.761,293 Scotland 211.087 .. 208,587 .. 227.415 Ireland 2,039.268 . . 2,136,715 . . 2,453,903 U.K 3,628,681 .. 3,854,402 .. 4,442,611 Thus England's expenditure has increased by 27.6 per cent., Scotland's by 7.8 per cent., and Ireland's by 20.3 per cent., or 22.5 per cent, in the total sum. It is an eminently satisfactory result for the distressful country in a period when cattle-driving is supposed to be flourishing, and when the land is, according to some critics, in a state of hopeless disorder that its expendi- ture should have increased less rapidly than in the more peaceable section of the United Kingdom. 75 The detailed items which comprise these totals are as follows : — Class III. — Law and Justice. Service. ENGLAND — Law Charges, England Miscellaneous Legal Expenses . . Supreme Court of Judicature . . Land Registry County Courts Public Trustee Police, England and Wales PrisoHS.England and the Colonies Reformatory and Industrial Schools, Great Britain Broadmoor Criminal Lunatic Asylum SCOTLAJN'D — Law Charges and Courts of Law, Scotland Register House, Edinburgh , . . . Crofters' Commission Prisons, Scotland Irel.axd— Law Charges and Criminal Pro- secutions, Ireland Supreme Court of Judicature, &c The Irish Land Commission County Court Officers, &c., Ire land Dublin Metropolitan Police . . . .! Royal Irish Constabulary j Prisons, Ireland Reformatory and Industrial Schools, Ireland Dundrum Criminal Lunatic Asylum, Ireland Total United Kingdom 1907-8, Estimate for 1910-11. £ 62,873 41,725 319,214 7,864 19,419 *51,899 586,339 257,499 31,494 88,632 41.764 5,196 75,495 55,201 108,914 112,431 112,963 90,753 1.342,229 101,066 109,667 6,031 3.628,681 £ 71,592 49,505 318,926; 37,824, ' 1,696 37,412 705,375 252,501 £ 86,096 49,764 330,718 37,999 5 10 110,312 783,077 282,812 34,269! 80,500 76,697 41,267 3,96a 86,658 82,909 43,561 4,465 96,480 63,251] 65,275 100,781 109,860 229,864 455,166 107,642 110,625 93,263i 95,982 1,319,2191 1,385,167 106,991] 111,602 108,678! 112,800 7,026* 7,426 3,854,4021 4,442. 611 In examining these figures it should be borne in mdnd that they do not represent the gross cost of the various bodies included, for nearly all of them have large re- ceipts or appropriations in aid which they receive from 76 fines, &c. The London police courts, for example, are not included, as they are entirely self-supporting, and, in fact, make a lucrative business out of those un- heroic persons who prefer a fine to imprisonmemt. Similarly the county courts in recen-t years have made no call on the public purse. The upkeep of prisoos is chiefly responsible for the increase in the English figures, the sums for 1907-8 being ;^i 20,000 in excess of that for 1897-8. The chief items in this increase are as follows : — £ Salaries, &c 50.000 Victualling 40,000 New building 10,000 Fuel. light, &c 10.000 Gratuities to prisoners and charities 5,000 The Scottish expenditure shows a gratifying decrease between 1897 and 1907, but later years have seen an increase once more. The figures are, however, very small. The Irish statistics are swollen enormously by the expense of the Irish Constabulary, which has always been regarded as an Imperial charge. The pretence of keeping the country under military rule from Dublin Castle only means that the cost of the police, which in this country is almost entirely borne by the local authorities, is in Ireland paid for on a much more lavish and extravagant scale out of the Imperial Ex- chequer. The Irish Land Commission is the only other item in the table which calls for attention, the difference between the ;^i 17,000 dn 1897 and the ;^455,i66 in 1909 representing the cost of working the Act of 1903. On the whole, the expense of administering justice and keeping order in the United Kingdom has shown only slight changes. It is a branch of the Estimates which we may hope to see reduced with the diminution in crime. Any tendency that there might be in this direction has, however, hitherto been checked by the increased admimstrative expenses of the prisons them- selves, and, in particular, by the very lavish scale of pay in proportion to the work done in the numerous law ofhces and departments of the country. These offices, indeed, show no considerable increases, but that is rather because their organisation has long been on a ridiculously extravagant scale than because they are inspired for a passion for economy. THE BOARD OF EDUCATION AND OTHER VOTES. In the Civil Ser\'icc the most important spending de- partment is the Board of Education, which now requires annually about 14 millions of the Imperial revenue. It is, of course, impossible to obtain either from the Estimates or from the appropriation accounts a complete statement of the amount spent on public education in this country, because much of the money is raised in the form of rates and expended by local authorities under the supervision of Whitehall. This naturally complicates the accounts, and it is a standing subject of disagreement among educational experts whether the Treasury is at present supplying a larger or a smaller percentage than formerly of the total cost. It has, for example, been said that " in 1871 the per- centag^e contributed by the Treasury was 90 per cent., and now it is less than 50 per cent.," but these figures are arrived at by neglecting- all the voluntary contribu- tions, the fees and the income from endowments, which formerly met the greater part of the expenditure of elementary schools ; these sources of income must obviously be taken into account if we are to form a proper estimate of the Treasury's importance in educa- 4A 78 tional finance, and it is probably correct to say that in 1871 the Treasury contributed not 90 per cent., but 14 per cenit. of the totai. In any case the actual cost to the Treasury has enormously increased in the past few years, and taking- together elementary education and the expense of the Science and Art Departments main- tained out of the Imperial Exchequer we find that the Estimate for 1908-9 is roughly ;^'i4,o65,ooo, agfainst an expenditure of _;^8,8oo,ooo in 1897-8. The accounts tliem selves are complex and difficult ; much of the money is not disbursed under any statuitory direction, but in accordance with an ever-cbangping and bewilder- ing- mass of codes and regulations, which are too tech- nical, and are no doubt meant to be too technical, for discussion in the House of Commons. It follo'ws that over a long period which, like 1897- 1908, covers many chang-es in legislation and the administrative system, it is extremely diflficult to trace movements exactly, and discover just how the increase has come about ; and a fortiori it is still more difficult to decide whether the taxpayer has had value for his money. In the follow- ing analysis questions of policy must be left on one side, and attention fixed on the difference in the various items between the present Estimates and those of ten years ago. The Estimates for the Board of Education come under Class IV., which now covers 14 separate heads, all of which are connected more or less closely with education, though only one of them has to do with English elementary education, the department in which expenditure has risen most rapidly. The other heads deal with the British Museum, picture galleries, re- search, and university education, and the financial burden of these institutions falling on the Treasury has altered comparatively httle during the ten years. In the following table we show the cost borne by the Ex- 79 chequer under a number of different headings, all of which fall in Class IV. of the Estimates : — Class IV. — Education, &c. Service. 1897-8. 1907-8. Eaiimate for 1910-11. Public Education, England and Wales £ 8,038,115 800,543 162,140 14,734 5,607 27,942 103,964 1,164,589 3,400 1,196,533 849 2,452 4,950 £ • 13,272,625 169,794 16,525 5,870 6,195 53,823 200,938 2,031,790 5,092 1,391,938 906 3,082 4,700 £ Department of Science and Art for the United Kingdom .... British Museum 14,064,677 175,895 National Gallery 18,348 National Portrait Gallery Wallace Collection 5,666 6,466 Scientific Investigation, &c Universities and Colleges, Great Britain, and Intermediate Education, Wales SC0TLA^•D. Public Education 74,228 218,100 2,253,725 National Gallery, Scotland .... Ireland. Public Education 5,326 1,656,901 Endowed Schools C'mmissioners National Gallery, Ireland .... Universities & Colleges, Ireland 925 3,146 168,080 11,525,818 17,163,278 18,651,483 Taking' first the expenditure in England, we find that the cost, apart from public education and the Science and Art Department, amounts, according to this year's Estimates, to less than ;^5oo,ooo out of a total of _;^' 1 4, 500,000, the relation between public edu- cation, &c., and minor institutions worldng out in the following way : — 1897-8. Estimate, 1910-11. Increase. Public Education and Scicnce and Art £ 8,838,658 314,387 £ 14,064,677 498,703 £ 5,226,019 Other departments 184,316 9,153,045 14,563,380 5,410,335 8o So far, then, as Engfland is concerned, the expendi- ture on the other departments in Class IV. is extremely small, and the increase in ten years is quite moderate. In a period when elementary education has made, or at any rate ought to have made, enormous strides it is only right that the aids to the higher form of education should also increase, and no one is likely to grudge the additional sums spent on the new pro- Vfinoial colleges and universities or on the British Museum and the various picture galleries. But when we come to the cost of elementary educa- tion in Great Britain w-e get a very different story. Here the Treasury is to expend during the current year more than ;£^5, 000,000 more than it spent in 1897-8, the percentage of increase being well over 50 per cent. The chief items oi expenditure are, of course, the grants made for different purposes to different sorts of elementary schools. The various administrative changes evolved since 1897 have carried with them corresponding changes in the form of the accounts, and the phraseology of the department has altered so much that an exact and detailed comparison is very difficult. But in the folJiowing figures we show the difference between the total sum put down to grants in the appro- priation accounts of 1897-8 and the appropriation ac- counts of 1907-8 : — Geakts to Elementary Schools. 1897-8. 1907-8. Increase. £ £ £ 6,981,000 ... 11,129,000 .... 4,148,000 Thus practically the whole of the increase in the Board of Education accounts arises out of the grants made to elementary schools, and it may be well to set out 8 1 the various heads under which this expenditure was incurred in 1907-8 : — £ Pensions and gratuities to teachers 101,499 Annual grants 5,679,641 Grants in lieu of fees 2,640,863 For education of blind, &c 65,166 Aid grants to local education 2,451,735 Special grants for building 4,700 Special grants to certain local education authorities 135,713 11,129,317 The appropriation accounts for 1897-8 gave the follow- ing results : — £ Pensions and gratuities 34,095 Annual grants 4,546,835 Free grants for day scholars 2,240,772 Grants for blind, &c 17,723 Grants to school boards under special Acts 141,997 6,981,422 Broadly, it may be said that all legislation of the last few years has tended to increase the burden laid upon the Treasury. Whatever the object of the particular Bill, whether to appease the Church or satisfy the Nonconformists, whether to " co-ordinate education " or " strengthen popular control," the financial effect has always been the same, and the sums demanded from the taxpayer have constantly risen. Unfortu- nately, expert knowledge of education and expert know- ledge of finance are not often found in combination, and the greatest enthusiasm for educating the young is often accompaniied by an utter carelessness of the money of the taxpayer, and we actually find a proposal put forward for adding out of the Exchequer a certain pro- portion of anything that a local authority decides to .spend on education. In other words, the local man is to be given a blank cheque on the Treasury, and may squander any amount of taxes so long as he squanders 82 the rates in a fixed proportion. This sugg^estion is prima facie so wild that no responsible official could entertain it for a moment, but it illustrates well enough how financial interests are allowed to go to the wall in a three-cornered fight between the experts and the religious extremists. The Estimates for the current year show that the expenditure in grants to elementary schools is to be more than in 1907-8, and the followdng are the figures sanctioned by Parliament for 1910-11 : — £ Pensions and gratuities 138,780 Annual grants 5,891,400 Grants in lieu of fees 2,700,000 For education of blind. &o 81,000 Aid grants to local education 2,495,000 Special grants to certain local authorities 200,000 Special grants for building 5,000 11,511,180 Apart from these grants made directly for the sup- port of elementary education, w-e have to consider the grants given to training colleges for elementary teachers. Compared to the cost of keeping up the schools, this is not a very large item, but it has grown proportionately at a great pace during the last ten years, and — as we must always remember — ^the money spent on these institutions is not accompanied by as much public control as is exercised even over non-pro- vided elementary schools, and it is not altogether satis- factory to find that it rose between 1897-8 and 1910-11 by well over 200 per cent., the exact figures being as follows : — £ 1897-8. Annual grants to training colleges 166,809 1910-11. Maintenance grants for training colleges and building grants 590,000 It is obviously important that teachers in elementary schools should have the best possible training the nation can provide ; but it is very desirable that the S3 spending- of the nation's money for this object should not be left to irresponsible boddes who are allowed to impose religious tests on those admitted to the colleges of the various denominations. The figures that have been given in the above tables show that the cost of public education is enormously greater now than it was ten years ago, and that, unless the growing generation is mentally far better equipped now than then, there has been a serious waste of public funds. Whether we are really getting our money's worth out of the local authorities and the elaborate system that has been built up since 1897 is a question that cannot be decided by figures ; but there are certain considerations that ought to be taken into account, and we would suggest that much may undoubtedly be done to ensure greater efficiency and prevent leakage. The Treasury should secure that grants are more strictly earmarked for the benefit of the child. At present there is a vast amount of waste in unnecessary luxuries, in the building of ornamental palaces, in the multiplication of clerks, inspectors, and so forth. The regulations of the Board of Education offer a rational method of economising grants and increasing the efficiency of the schools ; the grant for any school may be diminished wherever there is in- efficiency ; this power might be freely used ; it should, in fact, be a rule of the Board to penalise in this way a considerable percentage of the schools ; such pres- sure on the worst 25 per cent, would quickly improve them, and would, at the same time, set free a very substantial sum of money ; but these powers are not used. Gradually all the old safeguards for efficiency and economy have been swept away, and the Board of Education pays less regard to those which it has per- functorily inserted in its voluminous codes. .'\ Depart- mental Comnvittee was appointed by the Treasury a 84 few years ago to inquire linto the proper relations to be established betv\een the taxpayer and the ratepayer ; but it was quietly suppressed, and made no recom- mendations. The first principle determining contri- butions by the Imperial Exchequers should be to secure by statute a fixed and certain contnibuition towards the education of every child ; and secondly, a substantial supplementary oontribution towards the additional cost thrown on any district by its poverty, its super- abundance of children, its low rateable value, or its high cost of living- ; and thus secure to each locality that minimum income which is essential. After that the locality which desired to spend its own money in improving' local education should be free to do so. We hope that the Parliament of 191 1 will forget the " re- ligious difficulty " for a short time and undertake a drastic overhauling of the Board of Education and of its financial methods as part of a general plan of public retrenchment. FOREIGN AND COLONIAL. The next class shows a considerable increase in ex- penditure, and the figure for the current year may not fall short of that for 1907, if heavy supplementary Esti- mates are added to those already given. The chief items are as follows : — Class V. — Foreign and CoLONiAti. Service. 1897-8. 1 1907-8. Estimate for 1910-11. Diplomatic and Consular Services .... Uganda, Central and East Africa Pro tectorates, and Uganda Railway .... Colonial Services £ 449,464 246,463 355,364 40,000 67,100 £ 544,004 1,396,310 £ 613,814 1.1 47 759 Cyprus Grant in Aid 50,0C0 ' 40!000 Subsidies to Telegraph Companies .... 51,724 61,247 Total (including other expenditure) . . 1,160,212 2,042,364 1,862.190 The larger part of the expenditure under this head arises from the practice of subsidising- the colonies with the British taxpayers' money. In the days of Palmerston, Gladstone, and Disraeli British colonies became self-supporting, and consequently a source of strength to the mother country. That boast can no longer be made as regards many of the colonies. Even colonies so long established as Jamaica and the other W^est India Islands constantly receive assis-tance from the Imperial Exchequer, while the newer colonies in East and West Africa are a cause of a very heavy ex- penditure. The defence usually put forward for this expenditure, at any rate in the case of Nigeria and East Africa, is tliat the present outlay must be re- garded as a capital investment, but no attempt is made to keep a capiital account or debit the colonies with the money expended upon their development. Eor example, in the case of the Uganda railway, which is now beginning to yield a revenue in excess of working expenses, the whole of the excess is handed over to tne East African Protectorate, w^hile the British taxpayer still continues to provide the whole of the interest and sinking fund upon the capital invested. STTPEEANNTTATION AND NON-EFFECTIVE SERVICES. The first item in this class is a result of the serious growth in the personnel of the Civil Service. Every person added to the Government service, whether civil or mihtary, is a person witlidrawn from the productive and revenue-producing classes, and added to the great army of those who live upon and swell the taxes. The item of Savings Bank and Friendly Society deficiencies is swollen by the sum paid on account of the Post Office Savings Bank, which pays a higher rate of interest on deposits than is justified by the low return obtained from its investments. This efTiciency, which was 86 p^ii,6oo In 1897, amounted to _£^i20,ooo in 1907, an enormous increase in the subsidy paid by the Govern- ment on the saving-s of the working man. Class VI. — Non-Effective and Chabitable Services. Service. 1897-8. 1907-8. Esti- mate for 1910-11. Superannuation and Retired Allowances Pauper Lunatics, Ireland £ 538,375 137,511 46,324 747,639 £ 648,169 143,593 £ 768,598 16,941 66,061 Savings Banks and Friendly Societies' Deficiencies Total, including other grants Add Old-age Pensions 810,377 810,377 853,019 9,220,000 Total estimate 747,639 10073019 Old-ag-e pensions are included in the Esitimate, but it lis impossible to say at present whether the sum allowed will be sufficient to meet the additional cost caused by the removal of the pauper disqualification. The de%'ice of using the organisation of the Post Office for distributing the pensions is an excellent one, and and has reduced the admimistration expenses to a very low figure. MISCELIANEOTJS. The payments under this heading have increased con- siiderably during the last ten years, but it will be seen that a great part of the addition is under the two heads — Irish Development Grant and the British De- velopment Fund. The Estimates for the coming year, exclusive of this latter fund, show a reduction, but they include no provision for the unemployed, and it will also be observed that the Estimates for temporary com- missions and miscellaneous expenses are very low. Presumably there will be something in both these classes in the supplementary Estimates. A sum of s- ;^43,ooo has, in fact, already been added to cover the funeral expenses of the late King-. Class VII. — Miscellaneous. Seevice. 1897-8. 1907-8. Estim'te for 1910-11. Temporary Commissious £ 31,624 76,408 100,446 £ 60,301 185,000 148,143 50,000 £ 39,000 Celebration of the Sixtieth Anniversar% of Her Majesty's Reign Land Tax Redemption Irish Development Grant 191,558 Expenses under Unemployed Work- men's Act, 1905 Grant to Earl Cromer Miscellaneous Expenses 11,054 Repayments to the Local Loans Fund. Government hospitality 2,412 10.000 International Exhibitions 54,250 Development Fund 400,000 Prince and Princess of Wales (visit U South Africa) 10,000 Total 355,859 512,707 748,274 The sum for Temporary Commissions (almost the only permanent item in this list) shows a very large proportionate increase, viz., ;;£^6o,300 in 1907-8, com- pared with ;^3i,624 in 1897-8. This item is one of tho.se small leakages which because the sum involved does not run into millions often escape notice. There is very little control over the expenditure of these temporary commissions, for they are usually left to determine more or less the extent and scope of their own inquiry, as the terms of reference are often vague. The recent Poor Law Commission, for example, is a case in which, though the members arc unpaid, money has been spent very lavishly. Yet the report has been described by an ex-Prcsldent of the Royal Statistical Society as still-born so far as epoch- making legi.slation is concernetl. If ihe Commission 88 had been less ambitious, had taken more time, and pre- sented reports at intervals on special subjects, there would have been a much better chance of lcg"islataon on the lines proposed, and the reports would certainly have been more widely read. The Poor Law Com- mission had spent up to March, 1908, the sum of ;^2o,ooo, the prcA^ous year's expenditure being a sum of ;^i 1,300. Its subsequent expenditure has added an additional _;^io,ooo. The Canal Commission is another spendthrift body, which since 1908 has run through ;^i 20,000, of which travelling expenses account for ;!^2,ooo. No one would \\'ish to deny that these tem- porary commissions often do good service to the nation. The mere possibility that the Tuberculosis Commission may do something to check the ravages of that disease is perhaps worth the ;^57,ooo which has been spent by the Commissioners, while the evidence collected by the Poor Law Commission will have much value for future workers on social matters. The point to which atten- tion should be drawn is the absence of any real control, and there is much to be said for the policy of not giving the Commissions a free hand, but of assigning a given sum to be spent in the investigation of a particular subject. If no result has been reached when that sum w^as spent the Government would have an opportunity of considering whether the work done by the Commission was likely to be fruitful or not, and if the decision were in favour of the Commission a further sum could be assigned to the Commissioners. But perhaps those in authority find a Royal Commis- sion the easiest, if not the cheapest, means of keeping busybodiies quiet and sending enthusiasm to sleep. EEVEKUE EARNING DEPAETMENTS, Of the items included under this head, the Post Office alone shows a large increase. The Customs and Inland Revenue Departments, on the other hand, have not 89 advanced out of proportion to the work entrusted to them, though it would seem that the creating' of a separate department for Customs, and the necessary reduplication of the staff involved, tog-ether with the org-anisation of new officials required by last year's Budget, will cost the country some ;^35o,ooo. VIII. — Revesce Departments. 1897-8. 1907-8. Estimate for 1910-11. Customs £ 845,191 1,818,642 7,602,564 746,757 3,251,855 £ 949,387 2,275,184 17,619,010 £ 2 230,400 1,324.C00 Inland Revenue Post Offi->e Post Packet Service 19,828,256 Post Telegraphs 14,265,009 20,843,581 23,382,656 As reg'ards the Post Office, the accounts must be taken on both sides. The fig^ures of revenue for the years 1909 and 1897 compare with the expenditure as follows : — Revenue. Expenditure. £ £ 1897-8 15,180,000 .. 11,601,000 1909-10 (Estimate) .... 23,626,000 .. 19,846,000 It will be seen that the profit earned by the department for the relief of the taxpayer has increased from ;^3, 579,000 in 1897-8 to ;^3,78o,ooo in 1909-10, and if this growing profit were earned in the ordinary way of business it would be satisfactory. But it is neces- sary to remember that the Post Office is endowed with a monopoly, and that the profit earned arises exclu- sively from the collection, conveyance, and distribu- tion of penny letters. That service costs considcnibly less than a penny per letter, and part of the cost must, therefore, be regarded as a tax. It is a very good tax, as taxes go, but its yield slaould be go judg-ed like the yield of other taxes, and no Chancellor of the Exchequer ought ever for a moment to admit thiait because this tax yields a considerable revenue, therefore the Post Office is justified in indulging- in needless or unprofitable expenditure. This, however, is what is in practice done. The administration of the telegraphs by the Post Office involves the nation in a heavy loss of not less than _^i,ooo,ooo a year, and while the Postmaster-General still underpays some of his servants, he places a heavy burden on the tax- payer by overpaying others, and, also, it would seem, in the case of telegraphs by undercharging consumers, especially newspapers, for messages. The Post Office, in fact, while professedly working as a commercial concern, is a litde too apt to be run as a political maohine, and the taxpajer has to find the money. 91 CHAPTER V. ACCOUNTS AND RETRENCHMENT. It may be useful to add something as to the different modes in which the national accounts are presented. There are, as might be anticipated in a subject so vast and complicated, many pitfalls for the unwary investi- gator, and although our system of Parliamentary and constitutional finance, built up under Pitt, Peel, and Gladstone, is probably on the whole a model for imita- tion, it is still susceptible to improvements, as Mr T. G. Bowles (one of the few independent and competent critics) is never tired of showing. He has already been instrumental in preventing some attempts, notably by the Army Council, to weaken Parliamentary control, and he has recerutly persuaded Mr Asquith to institute some important and valuable changes in the exposition of our expenditure. We may refer by way of illustra- tion to one example of a Public Return : — The Fowler Return is intended to show " the true cost of the Imperial Government so far as it falls on the general taxpayer or the community at large." For this purpose receipts under the head of Post Office, sales of stores, obsolete vessels, &c., are deducted, and thus a total expenditure of only £137,317,044. is arrived at. But our whole expenditure, without any de- ductions or omissions, including all expenditure out of loans, all grants in aid to local bodies, all appropria- tions in aid from sales by departments, as well as all the issues from the Exchequer, amounted, as Mr Bowles has shown (subject to final adjustments in the appro- priation accounts), to a grand total of ^166,351,663 for the financial year 1907-8. One of the consequences of official exclusions is that plain f>eople do not fully understand the financial situa- tion. Thus, for example, the growth of expenditure out of borrowed money for works and other capital pur- 92 poses between 1895 and 1905 was enormous, yet was concealed from view. At the end of the period it had practically obliterated the Sinking Fund. By cur- tailing and nearly extinguishing the system in regard to unproductive mjlitary and naval works, IVIr Asquith has restored the Sinking Fund to full operation, and has extinguished in three }'ears an unprecedented amount of public debt. One of the results is that, while the disastrous nature of our finance from 1895 to 1905 was by no means fully realised, because it was not properly expounded and elucidated in the Budget and in the Estimates, the improved position of affairs since that time has also been to some extent withdrawn from observation. Mr Asquith, however, as Chancellor of the Exchequer, gave the true figures of our unproduc- tive expenditure, and the following tables compiled by Mr Bowles* throw statistical light upon the whole matter : — The Abmy and Ordnance Expendi- ture was : 1. According to — (o) Budget Stitement at end of\ the year ib) Finance Accounts L (e) Statistical Abstract ; and [ id) Public Income and Expendi- ture Return • 2. According to Fowler Return 3. According to Appropriation Ac- counts 4. According to Mr Asquith, March 2, 1908 The Navy Expenditure was : 1. According to — (a) Budget Statement at end of \ the year (b) Finance Accounts I (c) Statistical Abstract ; and | (d) Public Income and Expendi- 1 ture Return ■ 2. According to Fowler Return 3. According to Appropriation Ac counts 4. According to Mr Asquith March 2, 1908 In 1804-5, 29,225,000 28,238,476 33,411,841 36,3CO,000 36,830,C0C 36,202,213 38,293,738 41,400,000 In 1905-6. In 1906-7, 28,850,000 28,041,449 32,043,809 32,800,000 33,300,000 32,284,188 34,861,442 38,200,0C0 In 1907-8. 27,765,000 26,878,177 32,072,563 32,050.000 31,434,000 30,319,023 33,262,649 36,000,000 27,115,000 26,187,1 8 uncom- pleted. 30,691,000 31,141,000 29,926,597 uncom- pleted. 34,750,000 * In his " National Finance" in 1908. T. Fisher Unwin. is net. 93 THE PATH TO KETRENCHMENT. There are an enormous number of difficulties in en- forcing public retrenchment. First of all, tliere is the relation of Ministers to the House of Commons, and next there is the relation of public servan.ts and experts to Ministers. I. What is to be done when Ministers play the con- fidence trick on learning- that their supporters a^e not only pledged to economy, but desire to redeem their pledges? The question may be answered by a re- miniscence. On the Armv Estimates of 1790, showing an increased peace establishment, Grenville and Pitt asked that the increase should be voted without argu- ment. Full confidence, they said, should be placed in Ministers owing' to their knowledge of the real situa- tion of affairs, " tlie exact state of which it frequently happened that they could not disclose without violating the constitutional and political .secrecy necessary to the well-being of their country." To which Burke re- plied : " Confidence may become a vice and jealousy a virtue, according to circumstances. Confidence of all public virtues is the most dangerous, and jealousy in a House of Commons of all public vices the mos-t tolerable, especially where the number and the charge of standing armies in time of peace as in question." The most ancient and important function of the House of Commons is that of guardian of the public purse. In regard to finance it is supreme, and cannot delegate its functions without being false to its trust. With a great part of the Press (utterly ignoirant even of the connection between expenditure, taxation, and public credit) hounding on Ministers to extravagance and denouncing economy as if it were a crime, this duty is more urgent and imperative than ever. What of the second obstacle? An utterly uncon- stitutional and impassible doctrine has been proinul- 94 g--ated of late that the servants of the State, oh-.il, naval, miilitary, oug-ht to have a determining voice in the ex- penditure. There is a Board of Admiralty and an Army Council in which expert officers sit to assist the First Lord and the Secretary of War. But they have not and cannot have any sort of constitutional responsi- bility for the expenditure. Responsiibiility for the expenditure is that of the Minister to the House of Commons. Admirals and generals and oivil servants in admdniistrative positions are responsible to their Parliamentary chief. They can help him to allocate the money which the Cabinet, subject to the wishes of the House of Commons, is willing to put at his disposal. Their business is to employ it economically and to the best advantage. They are entitled to resiign, and they ought to resign if they find that they cannot be of use. But they are guilty of very improper conduct if they resign or threaten to resign on questions of policy and of expenditure. If they wish to share in the national policy they should stand for the House of Common's. If the Govern- ment wishes to be ruled by its experts it should admit them to the Cabinet. The new type of expert adviser who has one foot in the Admiralty or War Office and one in a newspaper office is not merely a nuisance : he is playing a disloyal and unconstitutional part. It is not the game. There is no necessity for anyone to join Government service, accept Government pay, and retire on Government pensions. But if he does these things let him accept the consequences like a man, and not go about from newspaper to newspaper or from platform to platform abusing this Minister or that Minister and expounding public policy as a partisan. If he wishes to be a pohtician let him abandon his pay or his pension, and meet his opponents fairly and squarely. There is a great field of usefulness for ex- 95 perts ; but it is a field whach has certain bounds and limits ; and there have been far too many trespassers of late. TAXATION Am) ARMAMENTS. In consequence partly of the growth of armaments, partly of increased expenditure on the civil services and education, partly of the cost of old-age pensions, a considerable amount of taxation imposed by the late Grovernment during the Boer War still remains upon the shoulders both of the rich and the poor taxpayers. The present Government has made some modest reduc- tions both in the income-tax and the sugar duties, but on large incomes the income-tax is still, with a rebate on earned income, at the war rate of one shilling and twopence in the pound. Under these circum- stances, it is not surprising that Lord Avebury and a number of leading men, representing the interests of the City and of capital engaged in industry, shipping, &c., recently presented a petition to the Chancellor of the Exchequer urgiing " that the income-tax should be kept within narrow limits in normal times, so that its efficacy for raising additional revenue in times of emergency may not be impaired." Unfortunately, the Government is surrounded by a clamour for more ex- penditure, and those who plead for low taxes in time of peace do not seem to realise that they must also support the Chancellor of the Exchequer on questions of expenditure. Low taxes in time of peace are Im- possible if the establishments are maintained on a war footing, and all the other .services receive increased grants. Thus in response to a campaign of the Navy League, an addition of nearly four and a-half millions has been made to this year's naval Estimates, and there are rumours current of further increase next year. If such demands arc granted in addition to old-age 96 pensions (and old-age pensions, be it remembered, were passed with the support of both parties, and without evoking- an expression of dissent from any lead- ing member of the House of Commons), it is perfectly clear tliajt additions to the income-'tax (which is the war tax par excellence) will become inevitable, and such additions will fall in all probability mainly upon large incomes. In these circumstances, the inquiry naturally sug- gests itself, whether there is or ought to be any limit whatever to the sums expended upon the Navy and the Army, Probably most of our readers would agree with us that there are limits, and we certainly agree with them, and with practically everyone of our countrymen, that our naval supremacy must be main- tained. Therefore, in every discussion of the ques- tion, ^^•e have a common ground of agreement. The differences which arise are differences of degree. Thus, everyone holds tliat the British Navy ought to be stronger not only in skill, bravery, and efficdeTicy than the German or the French, but also in battleships, cruisers, torpedo-boaits, submarines, &c., and in the number of its sailors. On the other band, there is probably nobody outside a lunaitic asylum who would seriously contend that the annual expenditure on the British Navy ought to be thrice as much as the present annual expenditure on the German Navy. Anyone who thinks so would be committed to the proposition that instead of spending as we now do about forty millions sterhng on the Navy, we ought to be spend- ing about sixty millions sterhng. This would be far more than the combined yield of income-tax and estate duties, which amounted last year to 34 and 18 millions sterling respectively. In seeking to approach this subject through the avenue of common sense it may be worth while to recall the views held by our 97 ancestors, and their standards of public security. We will rely only upon four or five men whom the most extravag'ant newspaper wiarriors of tlic present day profess to regard as their masters and prophets. Our witnesses shall be William Pitt, the Duke of Welling- ton, Palmerston, Russell, and Disraeli. In questions of finance action is far more eloquent than words ; and Mr Pitt's plan in the ten years' period of i>eace, 1783-1793, which intervened between the American and the French war, was " to bring tlie expenditure of the Army and Navy to the very lowest practicable point." These are Lord Grenville's words, and the same statesman, when recalling all the circum- stances is 1 81 6, told the House of Lords that Mr Pilt, ill u;6cus:.ing ihe subject afterwards, always ex- pressed himself " in terms of self-congratulation and conscious satisfaction, that he had, by the most scrupulous economy at that time, enabled the country to meet that dreadful period of trial which it had after- wards to encounter." Lord Grenville was further con- vinced that " if Mr Pitt were now alive, he would have anxiously enforced the propriety of a low military ex- penditure at this period of peace." Mr Pitt, the greatest of War Ministers, at a time when there were constant dangers of European complications, and when Governments were far more ready to rush into war than they are now , fixed the annual expenditure on the Army at ;;£_' 1,800, 000, and on the Navy at ;^'2,ooo,ooo. This was, indeed, thrift, as Lord Rosebery, Pitt's biographer, and thrift's latest eulogist, would be the first to claim. The Duke of Wellington was the leading member of Sir Rolx;rt I'ecl's Cabinet, Commander-in-Chief of the Forces, and trusted adviser of the Government on all questions of defence from 184 1 to 1846. That again was a period of peace, though there were constant 98 alarms about a French invasion. The policy of Sir Robert Peel and the Duke of Wellington was to main- tain the Navy and the naval expenditure of Great Britain at a level about 50 per cent. abo\e that of the French, and when either Government made a small addition or diminution in its naval budget, a corre- sponding addition or diminution was usually made by the other. No doubt as the Duke grew older he be- came more timid, but he never seems to have been afraid of making himself responsible either as Cabinet Minister or as Commander-dn-Chief for the defence of his country from the greatest military Power in the world, and our nearest neighbour, so long as our Navy was maintained in the proportion of three to two as against the Navy of France. The case of Lord Palmerston is equally significant. He was probably the most bellicose and Imperialistic of all our Prime Ministers. He was constantly interfering in Con- tinental affairs, and not seldom made himself highly obnoxious to other great Powers. He often welcomed sensational pamphlets written by military and naval men, and professed to share with them from time to time the belief that France was preparing to invade this country. Nevertheless, during all the time that he was ^Minister, the ratio of military and naval ex- penditure as between Great Britain and France re- mained much what it had been from 18 16 onwards. There was initiated under his auspices what would now be considered a small, a very small, fortification scheme ; but in the last years of his Premiership our naval and military expenditures were considerably diminished. Lord John Russell, the other great Whig statesman of that time, who was very far from a peace- at-any-pnice politician, held very strongly to Pitt's doctrine. "It is by moderate establishments," he declared, " by rendering such establisliments good and 99 efficient, by attending to everything which cannot easdly be originated or replaced ; it is by such a system, and by relying on the greatness of the country and on the spirit of our people that you will be rrnosit formidable in war, and not by any new-fangled system of increased Estimates during a time of peace." He pointed out that the Crimean as well as the Napoleonic wars illus- trated the soundness of this, the traditional policy of Great Britain. Lastly, there is the example of Mr Disraeli, who led the Conservative party for so many years with such brilliant success, and may fairly be regarded as the joint founder, with Lord Palmerston, of modern Im- perialism. Li 1857 Mr Disraeli initiated an attack upon Lord Palmerston 's Government for having failed to effect an adequate reduction in the military and naval establishments after the Crimean War. Mr Disraeli was supported by Lord John Russell and Mr Gladstone in the House of Commons, and their attitude was en- dorsed by the Economist. Afterwards as Prime Minister of England, with Sir Stafford Northcote as his Chancellor of the Exchequer, Lord Beaconsfield pur- sued the traditional policy which we have outlined, and, except in time of actual war, estabhshments were maintained at a very moderate level. The maxim of this great Tory was : ' ' The more you reduce the bur- dens of the people in time of peace the greater will be your strength when the hour of peril comes." To brand as unpatriotic those who agree with the Duke of Wellington, Palmerston, and Disraeli rather than with a coterie of excitable journalists and experts, who know and care nothing about the financial and the commercial interests of the country, is surely rather foolish. The truth is that with a moderate reduction in establishments and the application of economical prin- ciples in place of extravagance at the Admiralty and lOo War Office, we can maintain a much higher level of security and a far more complete predominance at sea than our military and naval heroes of the past, our Nelsons and our Wellingi;ons, ever thought necessary. From the standpoint of the national existence, safety, and prosperity, we should prefer the plan of Pitt, Wel- lington, Disraeli, and Palmerston, together with an inoome-tax of ninepence, to what has been well called the Spanish Armada policy of the present greatly advertised Board of Admiralty. Printed by St. Clemknts Press, Ltd., Portugal Street, London, W.C. TOIYi: fFORNlA UNIVERSITY OF CALIFORNIA LIBRARY Los Angeles This book is DUE on the last date stamped below. orm L9-25/u-9,'47(A5618)444 AT 7764 !:ational expend- Ut bUU I MbHN HbblUNAL LIbKAKY hACILI I Y AA 000 847 068 4