October 2, 1915. 
LAND AND WATER 
estimate earlier in the war was that there were 
8,000 British merchant vessels in foreign trade, 
?f which about 25 per cent, had been requisitioned 
or fleet and transport purposes. That would 
leave approximately 6,000 for the ordinary pur- 
poses of trade. Of these the Germans have sunk 
by cruisers, fifty-six; by submarines, 184, since the 
campaign opened, and four earlier than February 
19; a total bag of 244 — approximately 4 per cent. 
As the rate of increase of merchant shipping — 
even in these days when the building yards are 
crowded with Admiralty orders — exceeds the rate 
of destruction, the damage to the country's over- 
sea service is a minus quantity. This, of course, 
is not to say that the loss of 244 sliips, with their 
cargoes, and the sacrifice of between 1,000 and 
1,500 lives are not matters of very serious moment. 
The point is that we can rely upon the sea for our 
supplies with the same confidence in war as in 
times of peace. 
A. PI. POLLE.V. 
MR. A. H. POLLEN S LECTURES ON THE NAVY. 
Rfr. Pollen will lecture on the Navy on behalf c! naval and 
military charities at: Cheltenham College, Oct. 2, 8.15; TriJiacIero 
Restaurant, after lunch. Oct. 3; Smith Cruvdon. St. Augustine's Hall, 
Oct. 6, 8.15; Downside College, Bath, Oct. 7; Clifton Coilege, Oct. 8, 
ECONOMY THROUGH TAXATION. 
By Harold Cox. 
BOTH at home and abroad the importance 
of Mr. McKenna's Budget as a great war 
measure has been fully appreciated. 
Foreign countries have realised, perhaps 
even more quickly than we ourselves have done, 
that the proposal to raise over £100,000,000 of new- 
taxation in a full year represents a striking con- 
tribution from Great Britain to the cause for 
which she is fighting. Reasons will presently be 
giA'en for thinking that even this contribution is 
not sufficient in view of tlie general financial 
situation. Nevertheless, it is, in comparison with 
previous efforts, a most courageous step, reflecting 
the highest credit upon its author. 
The broad problem we have to solve is how to 
meet a war expenditure which exceeds at least 
tenfold any previous experience. In the current 
financial year Mr. McKenna estimates that the 
total expenditure of the United Kingdom will be 
£1,590,000,000. From that total must be 
deducted, however, certain items which cannot be 
regarded as true expenditure in the ordinary 
sense. There is an item of £423,000,000 for ad- 
vances to foreign countries and Colonial Govern- 
ments. Whether all of this will or w411 not be 
recovered in the future is a matter of speculation, 
but it would not be quite fair to treat it as an 
expenditure analogous, say, to the payment of our 
soldiers and sailors. There is another item of 
£36.000,000 for payments made to the Bank of 
England on account of the bills of exchange which 
the Government guaranteed last autumn as a 
means of relieving the commercial crisis. Here, 
again, it is possible that some of the ex{)enditure 
now incurred may be recovered in the future. 
Thirdly, there is an item of £56,000.000, which 
Mr. McKenna somewhat vaguely described as 
being required for " food supplies and minor 
items." Apparently this refers to the purchases 
of sugar and other commodities made by the 
Government for re-sale to the public, and, if so, 
there ought to be a recovery, with or without a 
profit. 
A STILL INADEQUATE REVENUE. 
But even after all these three items are 
•deducted from the estimated expenditure for the 
-year, we are still left with the enormous total of 
£1,075,000,000. Of this £250.000.000 represents 
what may be classed as |)erm;inent expenditure — • 
namely, our present civil expenditure, the interest 
on debt,and thie normal cost of tlieAn^vnnd Naiy 
judged by pre-war standards. .We are tluis lefiJ 
with £825,000,000 as our purely war expenditure 
in the current year alone. In the South African 
war the highest figure reached in any one finan- 
cial year was £68,000,000, or less than one- 
twelfth of our present rate of war expenditure. 
The revenue on the previous basis of taxation was 
estimated by Mr. McKenna at £272,000,000. His 
new scheme of taxation is estimated to yield in the 
current year, together with the revision of the 
postal rates, £33,000,000, bringing the total up to 
£305,000,000. Comparing this with the figure of 
£250,000,000 above given as our permanent expen- 
diture, we see that the whole contribution out of 
revenue in the current year to purely war expen- 
diture is still only £55,000,000, in spite of the 
tremendous volume of new taxation that has been 
added. Next year, of course, a greater yield will 
be coming in from the taxation now imposed, and 
the situation will be more satisfactory, unless, 
indeed, we find, as may be feared, that the grow- 
ing war expenditure more than wipes out the 
growth of revenue. 
THE BURDEN OF DEBT. 
Evidently Mr. McKenna had this contin- 
gency in mind, for he was careful to warn the 
House of Commons that, gi'eat as are the burdens 
he is now imposing upon the country, greater still 
have yet to follow. It is to be hoped that his next 
proposals will not be so long delaA'ed as the third 
War Budget has been. From every point of view 
it would have been better if the proposals which 
were made last week had been made six months 
ago. The comparative ease with which the huge 
July loan was raised ought not to blind the 
country to the danger of piling up debt at the 
present rate. A new loan will be required before 
Christmas, and it is most im])robab]e that it can 
be raised at the same rate of interest as before. 
We must, indeed, expect that each new loan will 
entail some addition to the rate of interest, and, 
automatically, these additions will extend to the 
whole of the existing war debt, including that por- 
tion of our old National Debt which has been con- 
verted into War Loan. Thus the burden of the 
rate of interest upon the present and future 
generations goes on j^rogressively increasing. 
Alreadv it is estimated that the National Debt, 
on March 31 next, will reach £2,200,000,000. in- 
volving an annual charge of something over 
£100,000,000 a year. The hiRhest figure ever pre- 
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