being false to its principles. The co-ordinate authority of the two Houses is as much a Liberal as a Conservative tradition. Both parties are agreed on the necessity of reforming the Lords, and on the general lines which such a reform should take. No doubt there will be wide differences of opinion on the details, but these differences will cut across party lines, and will not involve the embittered disputes which arise when party loyalty is involved. The British people are good partisans, but they can get too much of party warfare, and they are not very tolerant of unnecessary squabbles. Only a few fanatics and election-agents are perpetually itching for battle. The side which sets the machinery of party in motion for a trivial cause is fairly certain to suffer for it in the long run. We have to-day a situation which above all things calls for reason and good sense. Our constitutional machinery is breaking down in many parts and needs overhauling. Reform of the House of Commons is, from the standpoint of national interest, at least as urgent as reform of the House of Lords. In the work of reconstruction, in which both parties are vitally interested and in which there is a growing agreement, success, as we have argued, is only possible by friendly co-operation. If the party trumpets are to sound over every detail we shall never get an inch forward. We wish to keep our Constitution intact, King, Lords, and Commons playing their due part in national policy. Of late years the Lower House has been changing its character, and becoming more and more the obedient tool of the Ministry and the party caucus. The crisis of last winter has probably done something to arrest the decline. It is well to emphasise the historic rights of the Commons, even though we may hold that they have often been lamentably overstated. But the cause of the Commons is not served by exalting it at the expense of the other House, and so attempting to break up the organic unity of an historic system. It is well to be a House of Commons man, but it is far better to be a Constitution man; for it is to the whole Constitution, and not to any one part of it, that has been entrusted the defence of the safety and liberties of the people.

BARY

THE

QUARTERLY REVIEW.

No. 425.-OCTOBER, 1910.

Art. 1.—INTERNATIONAL FINANCE IN TIME OF WAR. 1. Economic Inquiries and Studies. By Sir Robert Giffen, K.C.B. Two vols. London: Bell, 1904.

2. Finanzielle Kriegsbereitschaft und Kriegsführung. By Dr J. Riesser. Jena: Gustav Fischer, 1909.

3. Report by the Committee on a National Guarantee for the War Risks of Shipping. London: Wyman, 1908. 4. Europe's Optical Illusion. By Norman Angell. London: Simpkin, 1909.

THE question of financial preparation for war is one of vital importance to this country; and yet it may be said that this aspect of the problem of national defence has been practically ignored hitherto. London is the citadel of the international financial system; and, in the event of war with a European Power capable of challenging our naval supremacy, the London money-market would be immediately subjected to a financial panic of unparalleled magnitude and severity, a panic which could hardly fail to involve the whole community in incalculable losses, unless certain measures of precaution be taken.

The country which can hope to conduct a great war with the minimum of distress to its civil inhabitants, and to emerge from the conflict with the least permanent loss to its citizens, must possess, in addition to its naval and military forces, great national wealth, a prosperous and well-employed population whose food-supplies are assured at reasonable rates, well-ordered national finances which do not place an unduly high burden of taxation upon the people, and, finally, money-markets organised upon a sound basis, and banks and financial institutions able to meet with ease all their money engagements. It will be Vol. 213.-No. 425,

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instructive, in the first place, to consider how far the United Kingdom conforms to these ideal conditions.

In the matter of national wealth the United Kingdom occupies a more favourable position than that held by any other Power. The wealth of this country is greater than that of any other nation except the United States, and it exists in a more liquid form. A recent computation based on the lines of the estimate made by the late Sir Robert Giffen in 1903, places the national wealth of the United Kingdom at about 18,000,000,000l.; and another distinguished Civil Servant has recently estimated the national wealth at about 20,000,000,000l. This compares favourably with the estimates of about 14,000,000,000Z. in the case of Germany, and 10,000,000,000l. in that of France.

With regard to the supply of food and raw material in time of war, no great Power occupies such a vulnerable position as that which is held by Great Britain. More than three-fourths of the wheat consumed in this country are obtained from abroad; and on several occasions the stocks held here have fallen below one month's supply. For a large number of other foodstuffs and for practically all the principal raw materials used by our manufacturers we are equally dependent upon supplies from our overseas dominions and from foreign countries. On the outbreak of a maritime war the cost of marine transport would be largely increased, owing to the advance which would take place in the charges for insurance and the increased cost of coal and other materials; and there would be a great disturbance of the ordinary channels of trade. These influences would have the inevitable result of increasing the cost of living and throwing large numbers of workers out of employment. The question of foodsupplies has a peculiar significance for this country in view of the fact that a large proportion of the people live in a chronic state of distress. It has been stated on high authority that over one-sixth of the inhabitants of the United Kingdom live on the verge of starvation; and it may be feared that on most of these people the burden of the increased cost of living would fall with crushing effect. The evils of unemployment would be greatly aggravated by war, because our manufacturers would find much difficulty in keeping their works open, owing

to the collapse of credit, the shrinkage of our export trade, and the increased cost of production which would result from war.

Our position with regard to the supply of food and raw materials is so weak that it would appear to be an almost indispensable part of any comprehensive scheme of national defence that the State should undertake the duty of feeding the people, or, at least, of meeting the increased cost of living, in time of war. If some such measure be not taken, there is grave danger that the distress and unemployment which would occur immediately after the outbreak of war would be of such magnitude as seriously to hamper the Government. It is of the utmost importance that the Admiralty should be relieved from the pressure of an uninstructed public opinion, criticising adversely their strategic dispositions. The Spanish American war afforded an example of the mischievous influence which may be exerted by an unreasoning panic. The panic in America was not due to any fear of interference with the food-supplies, but to local alarm on the sea-board that a raid might be made on some of the coast-towns by Admiral Cervera's fleet. The influence of this panic was sufficient to cause pressure to be brought to bear upon the Government, which adversely affected the strategical disposition of the American fleet. It could probably be demonstrated that it would, on the whole, be an economic benefit to this country that the State should undertake to feed the people in time of war with a great naval Power; and that the addition which would be made to the ultimate cost of the war would be inconsiderable in comparison with the great national interests which would be served by the adoption of this policy. It is true that the Committee on a National Guarantee for the war risks of Shipping were unable to recommend the adoption of any form of National Guarantee, except that which is provided by the maintenance of a powerful navy; but even in the short time which has elapsed since the evidence was taken on which this conclusion was based, there has been further weakening in our relative naval supremacy.

So far as the national finances are concerned, Great Britain may be said to occupy a fairly satisfactory

position. In March 1908 the public debt amounted to 754,121,000l., equivalent to 167. 158. 1d. per head of the estimated population. The national debt of France at the end of 1907 was 1,233,927,000l., or 317. 88. 1d. per head. The Imperial Debt of Germany on March 31, 1906, was 173,445,000l., and the amount of the Federal Debts on the same date was 609,500,000l.; the aggregate amount of the Imperial and Federal debts being 782,745,000l., or 127. 158. 8d. per head. In the case of Germany, however, it is important to bear in mind the fact that a large proportion of the public debt has been incurred in respect of revenue-producing undertakings, such as railways, waterways and forests. In the general consideration of the comparative financial position of the three great Powers, it should not be forgotten that Great Britain is the only Power which has effected a substantial reduction in the amount of its public debt in recent years.

In the matter of Imperial and Local Taxation, the situation of this country is not equally favourable. The Imperial taxation of the United Kingdom for the year ending April 4, 1908, worked out at 21. 15s. 9d. per head, as compared with 2l. 118. 5d. for France, and 198. 7d. for Germany. International statistical comparisons are always unsatisfactory, owing to the practical difficulties in the way of obtaining precisely parallel conditions; and it must be pointed out that these figures do not afford a true basis of comparison, because in the case of Germany the Federal States have reserved to themselves the principal sources of direct taxation such as income-tax and death-duties.

The burden of local taxation in this country is becoming one of great magnitude. In 1904 the aggregate debt of the Local Authorities was 466,459,000l., or 137. 168. 4d. per head of the population; and during the same year the amount raised from rates averaged 11. 13s. 2d. per head. The Local Debt of France at the end of 1906 reached 186,059,000l. or only 4l. 14s. 9d. per head; while the amount raised by means of local taxation was only 178. 5d. per head. Local taxation in Germany appears to be considerably higher than that of France. In 1905 the average amount of taxes raised per head of the estimated population in fifty-four principal German cities was 17. 98. 2d. For a like number of English towns