STRICT ECONOMY

Dominion, Volume 13, Issue 36, 6 November 1919, Page 7

STRICT ECONOMY

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BRITAIN FACES FINANCIAL

OUTLOOK

REASONS FOR CAUTION BUT NONE FOR PANIC PROPOSALS FOR DRASTIC RETRENCHMENT By Toleer&Dli—Press Association-OoDvrieM (Roe. November 5, S.ts p.m.) London, November 1. There is great, public interest in the debate which lias begun in the House of Commons on the question of national expenditure. Mr. "Austen Chamberlain, Chancellor of the Exchequer, opened the debate with a Government motion—"That this House, realising the serious effects upon trade and industry of the enormous financial burdens resulting from the war, promises its hearty support to the Government in all reasonable proposals, however drastic, for the reduction of expenditure and the diminution of tho National Debt." Wln'lo the position as disclosed in a recent Whito Paper was grave, there wa.no reason, said ' Mr. Chamberlain, for panic. The situation to-day was better than he had anticipated in August. The tax and revenues were coming in extraordinarily well, while Customs and Excise were now estimated to yield .£33.500,000 above the Budget estimate. The budget estimates of tho tea and tobacco taxes would also bo exceeded respectively by four and fourteen millions. This was important, as it was eloquent of tho spending power of the people, which was a great factor alike in social stability and in revenue production. Indeed, he no longer thought that new taxation would be required to balance the incomings and outgoings. Dealing with the increase in expenditure over the Budget Estimate, the Chancellor mentioned that Italy and -France owed us much more than he had anticipated. Replying to denunciations as in administrative expenditure, he declared that if the whole of the organisations created by the war were swept away andthe staffs of all the Departments returned to tho pre-war salaries, only ,£22,000,000 would be saved. Ee announced that the unemployment donation would cease on November 21. The Government thought it would be impossible to terminate the bread subsidy immediately. Details of the "Cut." • Mr. Chamberlain . proceeded to announce drastic and immediate reductions in tho Army and Navy—tho Home Forces by 217,000, the Rhino army by 116,000. the army in France and Flanders bv 130.000, the forces in the Black Sea by fiOOfl. tho forces in Egypt and Palestine bv 22.000. and those in Mesopotamia by 70M._ These reductions would be effective on November ,15, while by December 1 t!"> army in Mesopotamia would be reduced by 94,000, including Iho Indians. The naval reductions included the transfer of five battleships in the Home Fleet into a special reserve, and one nf fered for sale. There had been larae cancellations of ships under construction, showing a saving of .£18,000.000. 'IV permanent personnel of the Navv would be reduced by 10,000. This showed that Britain was leading (hn way in disarmament among the nations of tho world. Capital Levy Proposals. Tho Chancellor proceeded to deal witli various proposals to reduce the National Debt. He denounced a general capital levy, because it would be unfair, and would encourage oxtravnyanec, deter saving., nnd was detrimental to the influx of foreign capital, and if it were once introduced for a good purpose, the public would feel no security against its introduction for other purposes. The question of a special levy upon capital accunvnlated bv reason of the war stood on n. different fooling. Ho did not dispute Ihe equity of the abstract principle of such a tax, but the difficulties were immense. However, . a select committee would be appointed to advise the (>'■- eminent on this matter. He concluded by nronhesyini; that a substantial.surplus would be available in 1020 for the reduction of tho National Debt without additional taxation or borrowing . Our burdens werp heavy, but our shoulders were broad. There was every reason for caulio», but none for pnnic. The Prime Minister (Mr. Lloyd George), ronlyin.*. cxm'osscd the opinion that the Chancellor had knocked the bottom out of the case of his critics. He emoilio':ised their disagreements in regard (o where to retrench. The greatest expenditure was" for the Army and Navy, and ho pointed out that the Navy 'would presently 'bo only the pre-war Navy, and it would be less at the end of the'financial year. Dealing with details, in reran! to the reduction of the personnel of the Army and Navv and Air Feces, tho Prime Minister said that the February forecast for March .11 was for 82.1.000 mi>n. Aclually there would bo only 300.000. Next year there would be a substantial surplus for the reduction of the debt. The nrovision for the liquidation of the debt in fifty years' was one of the most magnificent propositions concerning international liability ever advanced, and was a testimony to "British courage and foresight. Tho Government had established pensions amounting to i 120.000,000 annually. There had been exceptional charges in the current year owing to abnormal difficulties. The British' Army had been moro scattered over Hie world than any other army.

In reply to a nuery, Mr.. Lloyd Georse said thattlioy had. evacuated Armenia to economise. They were unable, to police the world, and he'honesfly thought that the other Powers ought to share the responsibility. Then the Government was criticised for not demobilising mere nuickly on the grounds that they knew Germany would sign the Treaty. "On the contrary," he said, "the Conference did not know till tho last mjnute that Germany would sipn, and then she only did sign because she knew Hint Britain had maintained a number of reserve divisions in France ready for tl>'« eventuality, and wilh which force Foeh was prepared to march to Berlin. Without this nmlpi"onili=ed force we should have snl-s<it!'(<nl defeat W deficit, and thrown away all our terrible sac"i flees to m>ke our accounts balance in 1919. Any Government doing llrs would lmvn deservd impeachment. a"d undoubtedly would h"'"' had it." o"iiig to the way in which we are dealin? with cur financial difficulties. Britain need not fear comparison with any country in the world. Conscription in Germany had rone, and her navy was at the bottom of the B°a. This significant fact gave grounds- for confidence in our financial stability in the future. Britain could weather "this storm as she had weathered every other. Nevertheless, he hoped that the economises would not deny the expenditure of monevs on obiorts essential to the na-, fional life, like education, for the war had fully demonstrated the value of technical education. Mr. Lloyd Georeo urged that I he truest- economy was increased production. The depreciation of the so'-°reign was at ".resent the heaviest tax. The ou'v rcmedv was production, which could lie got only by co-operation of contented people. Tt \r»° the irreatest. folly to urge a cessation of expenditure on health, eninfnrts. a"d Ireinincr of neople who had been nvmired to sacrifice their !ive< on battlefields for the country Hiev loved. War Office Finance, Mr. Winston Churchill. Minister for War, said that owing to the reduction of the Armies of Ocupiilirm. Germany's indebtedness o was reduced I>v forty-eight millions. The amount von'd not be received this year, although Germany had paid about a milion in currency for Hie .use of the troons i" Colnune. The Dominions owed tbe War Office fifty m ; ' lions in connection with the lnaintennnce of troops in the field during the war. He now antieinatwl. that ow-'ng tthe financial diffieu'Hos of Australia li« would receive only fifteen millions out of the thirty-five, set down, hut the ot'-er twenty was. a good on which the Dominions were paying interest. Ho pointed out that 67 out of 118 mil-

lions not included in the Budget wore War Office deficit, and constituted deferred payments. The remaining 51 millions was accounted for by increased pay in Iho Army, the railway 6trike, the stato of tho rupee exchange, and small unanticipated delays in demobilisation. At present there were 80,000 troops on tho Rhine'. By November 15 there would be +5,000, and this number would immediately afterwards be reduced by 12,000. We were guarding 138,000 Germans in France. Tho War Office was dispersing as fast as possible 100,000 Chinese and native labourers. Britain and Russia. He optimistically reviewed the situation in Russia. Denikin had now gained enormous territory, including the richest part of Russia, with a population of 10.000.000. He had taken 270,000 prisoners since Mav. In March, when serious fighting began, there were 430,000 Bolshevik boons, and. 320,000 anti-Bolsheviki. By September there were 100,000 .Bolshevik," ond 010,000 in the anti-Bol-shevik forces. Denikin had been advised that we expected his forces to become self-support-ing by the end of the present financial year.' Meanwhile, Cabinet had. approved a final contribution to Denikin of surplus stores, valued at .£15,000.000, which would be dispatched gradually (luring the winter. Hence we were approaching the end ofi our own entanglement in Kussia in- a way which was securing Mie same obieets as those of anti-Bolsheviki.

Abolition of Conscription. Mr. Churchill said he honed he would not 1m accused of militarism. Britain alone anions the nations of the wor d had taken "stops which would short lv abolish conscription. It was the only countrv in Euronc which practised wlisit it preached, and translated the sentiments of the League of Nations in.--great and swift policy of disarmament A Labour Amendment. Mr. J R. Clynes moved an amendment declaring that' the present national war expenditure was unjustifiable, and urging drastic economy, levy on capital, and a revision to Nio State of' war fortunes for the purpose of reducing the National Debt. He said that the Labour Party contended that the financial situation was so extraordinary as to call for extraordinary measures. He urged that an inquiry be.made on tho question ot the capital levy. , Mr Bouar Law, in winding no the debate, referred to the amount due from Germanv for the upkeep of the Army ot Occupation. This first instalment of Germany's debt would nndoubteiUv )•; nhtai™d As regards our .£8,000,000000 debt, certain items should be n.n offset acninst it. Tho Allies owed us over .£1,700,001). We owed America £&}- 000,000. The latter debt wis an oftset l<y the d«bts of the Allies to us. Then the Dominions owed u> JG200,000.000, India .£221,000,000, bringing down the debt to ,£7,000,000.000. Furthermore, he said he did not think Russia would always be a bad debt. As regards tlie German indemnity, he was confident we would got' !• considerable sum to reduce our debt. He declined to so frame the order of reference of the War Fortunes Inquiry Committee that it would pe'tr.nil investigation of tho ijiiestiion of a capital levy. Sir Donald M'Lean asked permission to move an amendment on the Labour amendment. , The Speaker ruled it out of order. Sir Donald M'Lean regretted that he and his colleaenes would be uimblo to vote against the Government, because thev could not enter the lobby with the Labour members unless an inquiry were 'held before the capital levy was decided. Amendment Rejected. The House rejected the Labour amendment by 405 votes to 50, the minority being almost! exclusively Labourites. The Government .resolution was then adopted unanimously.—Aus.-N.Z. Cablo Assn.