The Dominion SATURDAY, JUNE 11, 1921. FORCED ECONOMY IN BRITAIN

Dominion, Volume 14, Issue 220, 11 June 1921, Page 6

The Dominion SATURDAY, JUNE 11, 1921. FORCED ECONOMY IN BRITAIN

It may well be believed that the British Government, as one of yesterday’s cablegrams stated, '‘is now thoroughly aroused to the gravity of the financial situation.” During a period of little more than two months, and largely as a result of the. coal strike, not only the financial situation in tho. United Kingdom, but general conditions oi trade and industry have changed dramatically for the worse. lhe change is a staggering illustration of the eripplirig and destructive effect of industrial strife in a eountry which needs above all things the full and unhampered use of its productive energies in order that jt may carry its war burdens and establish the conditions of trade and industry that are essential to _tlic welfj.re of its population. Beiore the coal strike began, at the beginning of April, Britain was confronted by adverse conditions Jot trade which even at that date, had occasioned a serious increase of unemployment, and the need of public and private economy was very plainly emphasised. In comparison with the conditions brought about by the strike, however, those which obtained at tho beginning of April were almost prosperous. If the coal miners are included, the number of unemployed has much more than doubled since the strike began. The total now stands at about 3,500,000. More than a month ago the number of workers on part time was over a million, and it cannot be doubted that here also there has been a great increase.. Another indication of the prevailing trend is afforded- in the returns of British foreign trade. The figures for the month of May are given in one of to-day’s cablegrams. Particularly in exnort trade, there is a very heavy decline, not only as com* pared • with the corresponding month last year, but in comparison with earlier months this year. The table which follows shows how serious is the falling-off in British exports (excluding re-exports)—that is to say, in the trade upon which a, considerable pronortiion of the nopulation of tho United Kingdom is dependent for a livelihood: —

The comparison with last year is affected' by the drop in prices, but this facto-- is very far from accounting for the heavy decline of recent. months. Tn weight, British exports other than coal for January and February this year wore less by 22 nor cent, than in the same period last year, . and no doubt there has been a still heavier decline in th-e volume of exports during the last three months. The May figures in particular bear witness to the wrecking effect of the coal strike. It would be easy to pile up additional evidence of .the extent to which the United Kingdom is handicapned by the paralysis of its basic industry—the production of coal—but the broad facts are only too clear. Before the strike began the Monthly R'virii' issued by Barelay s Bank pointed out that the eoal exnori trade was down to less than one-third of the pre-war level (on a basis of quantity). and that “in the. home, mar-ket-there is hardly a single industry that can afford to pay the inland price, of coal.” The extent to which matters have gone from bad to worse as a result of the strike is written large in the figures of trade and unemployment, and the effect upon the national finances is, of course, disastrous. Tn the position reached, the. British Government is imperatively impelled to attempt drastic economies. With its other troubles, the United Kingdom is bearing an almost ernshinp burden of taxation which in ’tself handicaps efforts to re-establish frn.de and industrial nrosperitv. Nothing has vet been done to lighten this burden—unless the removal of the tax on excess profit® which are no lonizer being earned can be regarded in that light—and 1 yet' revenue, as is to bo expected in the ruling conditions of trade, shows a serious decline. It was mentioned in one of yesterdav s cablegrams that since April I the revenue has decreased by one hundred millions as compared with last year. The reduction of expenditure becomes in these conditions a vital necessity, but a brief survey of the financial position of the United Kingdom will show that there, are definite limits to the possibility of effecting economies. The revenue for 1920-21 (including a sum of 282 millions derived from the sale? of war stores) was £1,425,984,000. and this provided a surnlus of £230.600,000. which was applied to the reduction of debt. The Budget estimate of revenue for the current financial year was £1,057,150.000, Lilt in submitting this estimate Mr. ChambeßLMN (the retiring Chancellor of the Exchequer) stated that it would be affected bv the coal strike. There is little enough doubt that th" actual revenue of the year will fall very considerably short of the estimate. On the other ha.nd, some of the bicp-est items of expenditure are outside the scone of an economy programme. For instance, interest on *he war iH'ii and the permanent'’ charge on the nre-war debt account between them for £350,000.000. On Io" of H’’«. however, there is statutory nrovl--1 sion for a. measure of debt redemp-

bion. The Treasury is bound by statute to maintain a Depreciation Fund (for the purchase and cancellation of stocks), and to accept certain Government securities in payment of taxation. , During 1920-21 it allotted £31,920,000 to the Depreciation Fund, and received in payment of taxes securities to an amount of £76,292,000. Of the petal debt redemption of 230 millions last year, an amount of 108 millions was. in the sense stated, obligatory. Apart from any extra provision for redemption it seems plain that the service of the debt may demand a stint of 450 millions. Adding to this about 123 millions for war pensions, there is an amount of 573 millions which must be provided before economies are attempted. Apart from a payment of 24 millions on the nre-war debt, however, the United Kingdom after providing this sum has still to provide for all pre-war services, including the Army. Navy, and Air Force, and for additional services created since the war. With nearly 600 millions of revenue already mortgaged and the likelihood that the total revenue for the year may fall very considerably short of 1000 millions, it is evident that sweeping economies must be effected without loss of time if tho national accounts are +o balance at the end of the year. The Army, Navy, and Air Force Estimates framed for the current year call in themselves for an expenditure of 207 millions. The straits to which the United Kingdom is now'reduced carry an object lesson and warning of universal application. The root of tile trouble is the substitution of industrial strife for working unity, and even this country, though, it is relatively so much more fortunate in tho state of its national finances and in other respects, cannot afford to disregard the warning.

UNITED kingdom exports. 1920. 4! 1921. £ January .. 105,879,909 92,756.094 February .... .. 85,904,1.10 68,221.731 March .. 103,699.381 66,808,961 April .. 106,251,692 59,867,585 May .. 119,319,422 43,088,418