NEWS OF THE WEEK.

THE Chancellor of the Exchequer in the House of Commons on Wednesday, in opening the great debate on the finances of the nation, made just such a speech as was required to steady the nation. It is quite as difficult to keep a mental balance in such days as these as to strike a financial balance, but in our opinion Mr. Chamberlain was successful. It is easy to say, as many newspapers say on Thursday when we go to press, that Mr. Chamberlain ignored the black facts and tried 'a dope the country with soothing but hollow words. No loubt optimism in circumstances where there was no justification for it would be a great danger, but it is even more true that if you tell men—or at all events produce in their minds the impression—that they are ruined, and that however great their dforts they can never recover themselves, you will paralyse all their energies.

Mr. Chamberlain's duty was to tell the country that the situation could not be saved except by an overmastering effort and universal thrift, but that if both effort and thrift were combined the prospects, so far from being dark, were quite hopeful. Mr. Chamberlain carried out that duty extremely well. Obviously no single phrase or passage must be lifted out of its context in such a speech. The whole thing, a mingling of dark and bright, must be read together. If the speech be read in this way—the only fair and rational way—it will be found to be a most helpful, wise, and courageous speech, and we have no doubt that it will produce on the country the effect which Mr. Chamberlain designed. It will repeat the success of his Budget speech in creating confidence.

Mr. Chamberlain began by saying that though there was every reason for caution and a careful husbanding of our resources, there was " no excuse for panic." " So far as I am concerned, the position is distinctly better than when I spoke in August." The basis on which his speech was founded was the revised financial statements which were published on Monday. Accord. ing to these statements, the deficit at the end of the financial year will be 473 millions, or 223 millions more than was estimated in the Budget. The Army is responsible for 118 millions of this increase. It is expected that when " the normal year " returns—though that will not be next year—the Budget will be for 808 millions, as compared with the 205 millions before the war. well. Every item of Inland Revenue except the Excess Profits Duty equalled or exceeded the Budget estimate. The Excess Profits Duty would be less than he had anticipated by 20 millions, but this was not lost—it would come into next year's revenue. At the same time Mr. Chamberlain warned those who were backward in paying that he would have to consider the necessity of exacting interest on outstanding obligations. Customs and Excise were expected to yield 384 millions more than the estimate in the Budget. Tea was expected to yield 4 millions more and tobacco 14 millions more. Mr. Chamberlain remarked that he called special attention to these items because they " spoke eloquently of the condition and the spending-power of the people—a factor of prime importance."

Another tax which was a good test of the activity of business was the Stamp Duty. The estimate of revenue from this tax was exceeded by 4 millions. These were encouraging features, but the position had become more favourable in another way— namely, that the promised reductions of expenditure had begun to take place earlier than he had thought possible. In August he had felt bound to warn the House that it would probably be impossible to balance the incomings and outgoings next year without new taxation. " I no longer think that new taxation will be required for that purpose "—an important statement which was naturally received with cheers.

Mr. Chamberlain, having thus far dealt with prospects, turned to the current year, and stated that the increase in the deficit was largely due to the postponement of receipts to next year. When allowance had been made for this postponement, the actual increase of expenditure over the Budget estimate was 133 millions. How was this actual increase to be accounted for ? It was due to war pensions, war bonuses, extra expenditure due to the strikes, loans to Allies, and increased pay to the Army, the Navy, and the Air Force. All these items accounted for 97i millions out of the 133 millions.

We must pass over Mr. Chamberlain's explanation of why the general situation prevented the immediate reduction of the naval and military expenditure after the Armistice and come to the all-important question of financial control. Mr. Chamberlain said that for fifteen years or so the Treasury had been understaffed, and consequently ill-organized. For years past there had been no single permanent head. He had reorganized the Treasury under a single permanent head, Sir Warren Fisher, under whom were three Controllers, for Establishment, for Finance, and for Administrative Services. There was also to be a Cabinet Finance Committee consisting of the Prime Minister, Mr. Bonar Law, Lord Milner, the President of the Board of Trade, and the Chancellor of the Exchequer.

These movements are all in the right direction, though we look for results far more, we might say infinitely more, to the new Treasury Controllers than to the Cabinet Committee on Finance. Mr. Lloyd George himself has been one of the most prodigal spenders in the history of British politics. We could wish, for our part, that the Government would take a stop much more carefully designed to impress the public imagination and to command the necessary assent to sweeping reductions and economies. The Government ought to convince the country that nothing but ruthless economies can bring us back into a sound position. They ought to convey to the nation the idea that the country is like a needy estate which can be pulled round only by a very wise, careful, and enthusiastic body of trustees.

We should like to see some Advisory Committee of the foremost financial experts in the country appointed by the Government on the understanding that the word of this Committee should have almost the authority of law. By telling the nation that they meant to act upon the advice of their experts, the Government would shelter themselves to a certain extent from the unpopularity which they so heartily dread. Very likely the Treasury Controllers could be exalted into the kind of Committee we have in mind. It is very much a case of representing the matter attractively—if that word be permissible in. such a dismal context !—to the people, and convincing them of the necessity of accepting drastic courses.

Mr. Chamberlain went on to deal with subsidies. He said that, on the assumption that the output of coal continued to be satisfactory, the coal subsidy might be considered at an end. The railway rates were to be revised so that the railways would be made self-supporting. As regards out-of-work donations, these would be continued to discharged soldiers, as had been promised, for one year after demobilization, but the donations M civilians would end on November 21st We earnestly hope that the Government will abide by this decision. Nothing has been more demoralising, more certain to sap a man's selfreliance and his whole character, than the temptation to accept the donation rather than seriously to seek employment. Probably all our readers are aware of scandals in connexion with these doles.

The reductions in the strength of the fighting Services in the immediate future, Mr. Chamberlain said, would be very great. Between September 1st and November 15th the reduction of the Home troops would amount to 217,000 men. The Army of the Rhine by November 15th would be reduced by 157,000 men, the reduction having begun on July 26th. There would be corresponding reductions everywhere overseas, and the total reduction of the Army would amount to half-a-million. The Indian Army and the Navy were also being reduced. " We are," exclaimed Mr. Chamberlain, " leading the way in disarmament among the nations of the world."

He anticipated that next year there would be a substantial balance to go to the paying off of Debt. " In view of the whole situation, the House," he said, " would not expect me to bring in a new Budget. Two Budgets in the same year would really be injurious to the public interest." Of course, as Chancellor of the Exchequer, he wished to see the Debt reduced much more quickly than at present seemed possible, but what means of doing this were desirable or possible ? For his part, he ruled out a general levy on capital. He regarded a general levy as certain to damage trade and credit in every way. If the House desired such a thing, they must get it from another Chancellor of the Exchequer. He placed a special levy on war fortunes on an entirely different footing. In the abstract he could not dispute its equity, but the difficulties of collection would be enormous. It might be that the advantages would outbalance the difficulties, and he therefore proposed to refer this matter to a Select Committee. Here again Mr. Chamberlain took the right course. He stated the case for a levy on war fortunes—both the abstract desirability and the concrete difficulty—with extreme fairness. We may note here that an interesting outline of a scheme for taxation of war fortunes was published in the Daily News on Wednesday by Mr. Herbert Samuel.

Writing as we do on Thursday, we comment on this important debate at a disadvantage, as we do not know what will happen in the division. But so far as the debate has gone it seems to us that Mr. Chamberlain will persuade the House that he is more to be trusted than his critics. Another fact which will influence the division, quite apart from the character of the debate, is the undoubted disinclination of the House towards a dissolution. If any one wanted evidence of this disinclination, he could find plenty in what happened after the Government were defeated on Thursday week. " Resign " is the familiar cry after every Government defeat, even on a snap division. But although on Thursday week the division was by no means a snap one, but was the result of a keen and well-attended debate, the Government had not the least intention of resigning, if only because they knew that the House did not wish them to do so.

The debate to which we refer took place on a Government amendment on the Report stage of the Aliens Bill. Clause IV. of that Bill provides that no alien shall hold a pilotage certificate for any port in the United Kingdom. The Government proposed to except the special cases covered by the Pilotage Act of 1913.

The Government were of course perfectly right. They only meant to remain true to their agreement with France, which could not be upset without the most lamentable consequences. At the same time, while only intending to hold up a warning hand against the anti-alien feeling which was expressing itself immoderately as well ha ungenerously, they hopelessly failed to explain their case. It was badly stated by Sir Auckland Geddes, and the whole conflict was unnecessary. The amendment in its original form benefits only twenty-four aliens, and these not hostile aliens, who hold certificates for the ports of Newhaven and Grimsby. In the course of the debate Sir Auckland Geddes agreed to limit the effect of his amendment to France, thus depriving the Dutch pilots of their certificates, at all events for the time being. Nevertheless the Government were defeated.

There then followed an extraordinary episode in which the Government summoned to Downing Street the leaders of the rebels and patched up an agreement by which the rebels were to accept the Government amendment about pilotage, but received as a quid pro quo concessions which would make the Aliens Bill more severe in certain other respects. On Monday the Government amendment, in accordance with this arrangement, was duly inserted in the Aliens Bill. A remark which interested us particularly in the debate was made by Sir Edward Carson. He protested against the fashionable idea that a Government should be expected to resign whenever defeated in the House of Commons. We thoroughly agree. Of course there are matters of principle where no self-respecting Government could possibly give way. They must get their way or go out of office. They could signalize these instances by announcing that they regard them as questions of confidence.

But it is quite another matter to regard the life of a Government as forfeit because the Government have suffered some reverse in a mere business discussion. We need not go in detail into the question whether the amendment to the Aliens Bill raised a matter of vital principle, although for our part we think it did. The necessity for keeping faith with France was paramount, and we think the Government ought to have insisted upon passing Sir Auckland Geddes's amendment there and then without any of the =pleasing hagglings with the rebels which followed. But quite apart from that, there are countless occasions on which the Government ought to regard a small reverse in the House as rather helping them and informing them about public) opinion than as being a blow aimed at their existence. It would be an interesting pursuit for our historians to discover how the modern notion grew up.

It certainly was not always so. Consider the ease of Walpole in 1733 when he introduced his Excise Bill—a most sensible measure which aimed at introducing the system, very familiar to us now, of putting excisable goods in bond as an indirect means of discouraging smuggling. The very word " Excise " was hateful to the whole nation. Did not the Army say that it would not fight if its tobacco was taxed more heavily ? The controversy turned on the hated word " Excise," skilfully and unscrupulously used by Walpole's opponents, and not at all on the merits of Walpole's proposal. As a result, Walpole lost all hope of carrying his Bill, and abandoned it. But he did not resign. Not once, but many times, Pitt found himself in a like case. He could not do what he wanted, but he did not resign. We fear that the fashionable idea about the necessity of resignation is spread and cultivated by the highly interested comments of a partisan Press which invariably interprets a matter of business as a matter of iu-gent politics. It forgets that statesmen are executive officers as well as politicians. We would suggest to our readers that in reading the daily papers they should make sufficient allowance for this partisanship.

Mr. Balfour last week exchanged with Lord Curzon the arduous duties of the Foreign Office for the dignified sinecure of Lord President of the Council. It was generally expected that Mr. Balfour would leave the. Foreign Office when the chief Peace Treaties had been completed, and Lord Curzon, who had long acted as his deputy, was his natural successor. Mr. Balfour has served his country well during three momentous years in which our diplomacy needed his steadying influence and his shrewd common-sense. The Allies' Conference has made a good many mistakes through paying undue attention to amateurs and busybodies. That it contrived none the less to make a satisfactory

peace with Germany, Austria, and Bulgaria is due in no small degree to the wisdom and tact of Mr. Balfour. We are glad to know that he remains a member of the Cabinet.

The American Senate on Monday rejected by 40 votes to 38 the last important amendment which it was proposed to insert in the Covenant forming the introduction to the Peace Treaty. This amendment would have equalized the voting-power of the United States and the British Empire in the League of Nations Assembly. We may remark that such an amendment was unnecessary, as the Assembly is not likely to come to any important decision by a bare majority. The votes will be weighed as well as counted. The Senate has still to debate a large number of reservations which the Republicans wish to append to the Treaty. They would ratify it on certain conditions, some of which flatly contradict the provisions of the Covenant. One reservation, for example, asserts America's right to trade with a State that had broken the Covenant and had been boycotted. The main purpose of the reservations is, however, to transfer diplomatic and military powers from the President to the Senate. It is a pity that these domestic controversies, with which Europe is not concerned, should impede the ratification of the Treaty and the return of peace, from which America not less than Europe stands to gain.

The strike epidemic in America has not abated. Many of the steelworkers are still idle. The port of New York is suffering from a strike of dock labourers. The Miners' Union has threatened to cease work at the end of this week, thus repudiating its undertaking not to seek increased wages till peace returns. The President from his sick-bed has warned the miners that a strike would be a " gross legal and moral wrong " against the nation, and that the law forbidding strikes in war time would be enforced. Some sections of the railwaymen are also threatening to strike. The failure of an Industrial Conference, representing the employers, the Trade Unions led by Mr. Gompers, and the public, has encouraged the revolutionary Socialists who are always trying to oust Mr. Gompers and his moderate colleagues from the Executive of the Federation of Labour. The many illiterate immigrants from Eastern Europe who are employed in the coal and iron industries are peculiarly susceptible to the propaganda of such Bolshevik organizations as the Industrial Workers of the World. This alien element is responsible for the rioting that too often attends American industrial disputes.

General Yudenitch's advance on Petrograd was checked last week by the Bolsheviks, and this week he has had to fall back. Transport difficulties seem to have delayed him, giving the enemy time to bring up reinforcements. It is said that Esthonia and Finland will not co-operate with General Yudertitch because they are uncertain whether Admiral Koltohak's Government would recognize their independence. But the Russian patriots ought to be able, with Allied munitions, to overcome the Bolsheviks without calling upon the little Baltic peoples to help them. On the other hand, these peoples have much more to fear from the Bolsheviks than from the Russian patriots. General Denikin in the south and Admiral Koltchak in the east have also had reverses. Possibly the Bolsheviks are making a last desperate effort to avert defeat before the winter sets in.

The Allies on Tuesday appointed the Military Commission which is to see that the Germans evacuate the Baltic States. Meanwhile the German Army rema ins on a war footing in these territories and is still receiving supplies from home. Moreover, Colonel Bermondt's " Russian " troops, who are really Germans, are still bombarding Riga and fighting the Esthonian troops along the Dvina. The Germans are deliberately testing the patience of the Allies If Germany is allowed to break the clauses of the Peace Treaty referring to the Baltic countries, the future of these States, as well as of Poland, will be jeopardized and the plans of the Allies will be frustrated. No excuses on the part of the Berlin Government should be accepted. They are responsible for the forces lately commanded by General von der Goltz, and they must be held strictly to account for the actions of the General and his successor.

General Diaz, the Italian Commander-in-Chief, visited the City of London on Friday week and was presented with the honorary freedom and with a sword of honour. General Diaz, in assuming the command on the morrow of a serious reverse and a costly retreat, had. the most difficult task that could' be imposed on a general. He won our admiration no less by his

courage and firmness in forming a new and stable front before Venice than by his repulse of the great enemy offensive on the Piave, and by his brilliant victory of a year ago at Vittorio Veneto which brought the Hapsburg monarchy down with a crash. In honouring General Diaz the Corporation expressed the respectful gratitude which British people feel towards Italy. The Italians joined U3 when the war was going very badly, owing to the Russian defeat in Galicia. Their heroic efforts on their long mountain front attracted so many Austrian divisions from Russia that Germany, who had to fill the gaps in the East, was never able to collect an overwhelming force on the Western Front until March, 1918. Italy's• contribution, direct and indirect, to the victory was far greater than many people think.

Lord Curzon in the House of Lords on Wednesday lectured Lord Sydenham with some severity for having overlooked a White Paper in which Lord Sydenham's question about the Afghan Treaty had been answered. Nevertheless Lord Sydenham had done well to put the question, for it gave Lord Curzon an opportunity of explaining the nature of the Treaty. He laid stress on the fact that the Treaty was to be regarded 'as a temporary arrangement. If the Amir behaved well for six mouths, if he ceased to intrigue with the hill tribes on our frontier or with the Bolsheviks in Central Asia, if he was courteous to our Agent at Kabul, we should be able to make a new and more favourable Treaty with him. Lord Curzon said that, as we had stopped the subsidy to the Amir, we could not insist on retaining control of his foreign policy. The connexion between the two is not perhaps so obvious as ho assumed. But the inference is that, if the young Amir reverts to his father's policy of friendship for Great Britain, he will find it worth his while.

The Times has published a narrative, apparently from a Nationalist hand, of the abortive Irish Convention of 1917-18. It confirms our impression that, although Mr. Redmond may have been sincere in his proposals for a compromise, the bulk of his party, led by the Roman Catholic Bishop of Raphoe, was determined to make no real concession to Protestant Ulster. The Convention was thus doomed to fail from the outset. It is interesting to know, in regard to the Conscription Act of the spring of 1918, that " the Cabinet learned that British Labour would not consent to any raising of the age limit unless Ireland were at the same time called upon to do a larger share in the provision of troops." There British Labour spoke the mind of the whole British people. Must we infer that the Cabinet at that date was ignorant of the intense bitterness with which Great Britain resented the exclusion of Ireland from the Military Service Acts and the open disloyalty of many Nationalists These things are not forgotten.

Six Sinn Fein prisoners, two of them Members of Parliament, escaped from Strangeways Gaol, Manchester, last Saturday evening. They had been allowed the exceptional privilege of wearing civilian clothes and of meeting together for tea and exercise. They took advantage of their opportunities to overpower the warder guarding them, and then escaped by a ropeladder which their friends had thrown over the wall of the prison-yard. We confess ourselves unable to understand the principles on which the Home Office treats Sinn Feiners who have broken the law. The prison authorities are competent to guard ordinary offenders committed to their charge. But if they are compelled to treat Sinn Feiners as guests rather than prisoners, they cannot fairly be blamed if the men frequently escape. Thus the law is brought into contempt, an' the credulous Sinn Feiners in Ireland are taught to look on their leaders as heroes of the type of Dick Turpin.

We have received from " The Christmas Carol League " (12a Avenue Chambers, Vernon Place, W.C. 1 ; ld.) the following Christmas Carol fable, which is quite excellent. We commend it to our readers : " The Bolshie ' Wolf sat on the Railwayman's doorstep eating the children's supper, when the Grocer's dog drove him away.

` Mad dog ' yelled the Wolf. ' Profiteer I Yah !' And the Railwayman and the Policeman chased the dog off, while the Wolf ate all the food up.

So that the Railwayman and the children starved.

And the Philosopher said : Ah I Sometimes he's " Direct Action," and sometimes he's " Protection." But he's always " Famine" everywhere l' "