§ Perhaps—although it is not absolutely necessary, for it does not come into the financial statement—the House would like me to make a contrast, so far as I am able to do so, between our financial position and that of Germany. If is not easy to to make this calculation. Our figures throughout have been presented with the object of showing quite clearly what is our financial position. That has not been 703 the object of German financial statements. It is, therefore, difficult to make an exact statement, but in what I am going to say to the House I am taking the German Estimates at their face value—taking, that is to say, the statements of the German Finance Ministers themselves.
§ The first point is as regards the increase of expenditure. We have all been alarmed, and justly so, at the rate at which our expenditure has steadily grown. It is true also of Germany. Up to June, 1916, as we were told by the German Finance Minister, their monthly expenditure was at the rate of £100,000,000. It has now, by their own statement, risen to upwards of £187,000,000. That means that their daily expenditure is £6,250,000—almost the same as ours—although our expenditure includes such items, for instance, as separation allowances and other matters of that kind borne by the States and municipalities in Germany, and which are not taken into account in the German figures.
§ The second point of German finance, to which I wish to direct the attention of the House, is their war debt. Their last Vote of Credit, which was estimated to carry them on to June or July, brings the total amount of all their Votes of Credit to £6,200,000,000, and, as I shall show, it is at least certain that that amount has been added to their war debt. That is certain, because their taxation has not covered peace expenditure, and in addition, their debt charge. Up to 1916 they imposed no new taxation. In 1916 they imposed a War Increment Tax, taking something in the nature of a capital levy, which is stated to have brought in £275,000,000. They added also that year £25,000,000, nominally, to their permanent revenue. In 1917 they added, in addition, £40,000,000 to their permanent revenue. Assuming, therefore, that their estimates were realised, the total amount of new taxation levied by them since the beginning of the War comes to £365,000,000, as against our £1,044,000,000. This £365,000,000 is not enough to pay the interest upon the war debt which had been accumulated up to the end of the year.
§ Look at the third consideration in regard to their finance. Consider what their balance sheet will be a year hence on the same basis on which I have put ours. Their war debt at that time will be not less than £8,000,000,000. The interest 704 on that will be at least £400,000,000; sinking fund at ½ per cent. will be £40,000,000; their pension engagements, which, of course, must be much higher than ours, have been estimated at various amounts. Some give it as high as £200,000,000. I am sure I am within the mark in saying that by the end of the year that amount will be at least £150,000,000. Their normal pre-war expenditure was £130,000,000. That makes a total expenditure of £720,000,000. Their pre-war revenue was £150,000,000. They have announced their intention of this year raising additional permanent Imperial revenue amounting to £120,000,000. From the nature of the taxes it seems very difficult to believe that this amount will be realised, but, assuming that it is, it will make their total additional revenue £185,000,000. That, added to the pre-war revenue, gives a total of £335,000,000, showing a deficit at the end of this year, comparing the revenue with the expenditure, of £385,000,000 at least. If that were our position, I should certainly think that bankruptcy was not far from the British Government.
§ But there is something else in connection with their taxation worthy of note. With the exception of the Increment War Tax, to which I have referred, scarcely any of the additional revenue has been obtained from the wealthier classes in Germany. Taxation has been indirect, and on commodities which are paid for by the masses of the people. The lesson to be drawn from these facts is not difficult to see. The rulers of Germany, in spite of their hopes of an indemnity, must recognise that financial stability is one of the elements of national strength. They have not added to their financial stability. The reason, I think, is largely psychological. It is, in the first place, because they do not care to add to the discontent by increased taxation all over the country; but it is still more due to this, that in Germany the classes which have any influence on or control of the Government are the wealthier classes, and the Government have been absolutely afraid to force taxation upon them.