106 ECONOMICS OF THE WAR. 



In order to meet this deficit, the Government have to raise 

 further internal loans, and the public are now asked to subscribe 

 to a 4>< per cent, loan for practically an unlimited amount. 

 The result of this loan, which is not yet closed, is of course 

 unknown, but it is confidently hoped that the appeal to the 

 patriotic spirit of the nation will make the scheme a success. 

 The estimated savings of the country in peace time are annually 

 300 to 400 millions, and Mr. Lloyd George states that if the nation 

 will realize the position and save 20 per cent, of its income, 

 the deficit can be met. The addition of 1,000 millions to our 

 national debt, bringing it to 1,720 millions, will only represent 

 a mortgage of 9 per cent, of the actual value of the national 

 property; after the Napoleonic Wars, a hundred years ago, the 

 national debt was 33 per cent, of the estimated value of the 

 national property. Of the expenditure this year. 200 millions 

 represent advances to the Allies and Colonies, — the remaining 

 932 millions is for our own expenditure. 



A large proportion of this abnormal expenditure will be 

 made in the Colonies, America, and neutral States, with the 

 result that the exchanges against England will be very seriously 

 affected. It is estimated that during the year the imports will 

 exceed the exports by 400 millions. This balance will require 

 to be settled either by the sale of foreign securities or by the 

 export of gold. We have already paid New York 6 millions 

 from the reserve established at (3ttawa, but our holding of gold 

 in Great Britain will not stand any serious withdrawals. It 

 would appear, therefore, that the realization of securities will 

 have to be faced. In order to avoid the complication that has 

 arisen, the British Government have foreseen the necessity of 

 taking in hand at once the mobilization of our industries on a 

 war basis, so that we can avoid purchasing abroad and supply 

 our own wants. The problem had already been dealt with by 

 Germany and France, but we are only now realizing the impor- 

 tance of the step. The present conditions open an extremely 

 promising field for the Colonies, and especially in South Africa, 

 to establish an export trade in grain, meat, and wool on a 

 firm basis, which I trust will be taken full advantage of. It is 

 estimated that 2 million men are under arms, which is extremely 

 small in comj^arison with the population of the British Empire. 

 We have control of the seas, and need not fear for our supplies 

 of munitions and food. The great difficulty our statesmen 

 have had to face, has been to bring the British public to appre- 

 ciate the necessity of submitting to Government regulation until 

 the present crisis is over. 



Italy. 



I must also mention that Italy, after having kept her army 

 mobilized practically from the commencement of the war, has 

 now actively undertaken operations against Austria. 



Italy has a population of 35,000.000 people, and her army, 

 on a war footing, is estimated at 2.000,000. 



