HL Deb 10 November 1915 vol 20 cc232-80

VISCOUNT PEEL rose to call attention to the effect on our National finances of the increasing cost of the war; and to move to resolve— That, in the opinion of this House, it is the duty of His Majesty's Government to exercise a more effective supervision and control of naval and military expenditure.

The noble Viscount said: My Lords, I am going to introduce to your Lordships this afternoon a subject which is not so dramatic as questions of Oriental expeditions or the iniquities of Balkan Kings; nor even, perhaps, so stirring as the exploits of our seamen and soldiers, but which is, nevertheless, just as important as their achievements for the successful prosecution of the war. This matter is one which might well, I think, engage the attention of the House of Lords. I was a member of the House of Commons at the time the Parliament Act was passed, and I was one of those who resisted that Act. But I do not think that any of my colleagues who resisted it or even those who assisted it had a very close conception of the results which would attend that great Constitutional measure. It is one of the commonplaces of political history, I suppose, that the results of these technical changes are very different from the prophecies that are made about them, and 1 think it will have, perhaps, surprised those who dealt with that measure to realise that since the House of Lords was relieved from any anxieties or responsibilities as regards finance it seems to have taken more interest in and dealt more with the subject than it did during many years previous to that great change. And, curiously enough, a converse effect seems to have been produced on the House of Commons. While that House was contending for many years to get. full control of finance it necessarily bad to show its zeal and capacity for dealing with expenditure and cutting it down; but, very naturally, as soon as it secured complete control of finance, there was no longer any stirring motive to induce it to examine very closely into the details of expenditure, and so it is left to this House to deal with these matters.

In what I am going to say about military and naval expenditure I want to deal as little as possible with individuals, and certainly f shall not indulge in what are known as personalities. I have a broader theme than that this evening. I wish to present certain facts and certain deductions from those facts, as well as certain observations on the financial system of this country. But I think I may be permitted this observation, because reflections have been cast on those who have dealt—shall I say with personalities on this side. The Government, in my opinion, have some blame to take to themselves in this matter, because they have been very forward in pronouncing resonant panegyrics on their colleagues, and that, rather naturally, has aroused combative instincts in those who do not agree with them. The Ministerial pronouncements to which I refer have been very pleasant and argeeable statements as showing the chivalry and good will that obtain between colleagues, but I venture to say they might have had more weight possibly had they come from outside sources.

On July 6 my noble friend Lord Midleton brought forward a motion for investigating the question of civil expenditure. The estimate of civil expenditure for this year, including payment it for debt, is £170,000,000. Compared with the enormous expenditure for naval and military purposes that is, of course, a comparatively small sum; and even if you had the most, drastic of reformers, the most ruthless of economists, dealing with a sum of that kind, he could produce, taking the total of your expenditure, comparatively small effect upon the whole of the national finance. It is necessary, therefore, to take a wider sweep to-night, and to deal with what really is the great source of our financial expenditure—namely, our naval and military expenditure. The naval and military expenditure now ranges over the whole field of finance; indeed, it has grown to such proportions that it has become the great and dominant business of the war. We know that we have to spend vast sums. I am not going into any criticisms of expeditions, or anything of that kind. But I want to examine whether the system under which these sums are expended is a good one, and whether any changes can be made in it; and I should like to present to your Lordships some figures allowing the general state of our finances at the present time.

We have had certain estimates presented to us by different members of the Government, and I Will give these for two reasons First, in order that your Lordships may have the figures present to your minds; the second reason is that it shows how difficult it is— it must, of course, be difficult— to form estimates of naval and military expenditure, and how rapidly these estimates are constantly growing. In the second War Budget, which was introduced in May, the then Chancellor of the Exchequer estimated our war expenditure for this financial year at £1,133,000,000. In September, four months later, the estimate given by Mr. McKenna was not less than £1,590,000,000—a difference in estimates in four months of £457,000,000. Take the estimates for the Navy. In May they were £146,000,000, and they rose in September to £190,000,000. The rise in Army estimates was, not unnaturally, much larger; the amount in May was £600,000,000, and it rose in September to £715,000,000. There is even a more significant and important rise in connection with advances to our Allies. The estimate under that head in May was £200,000,000, and in September it was no less than £423,000,000.

The figure of the daily expenditure has been given recently and is familiar to your Lordships. But a remarkable thing as showing how these estimates are framed and how far you can rely upon them is this. The Prime Minister himself, on September 15, estimated the daily expenditure on the war at £3,500,000. Only one week afterwards—on September 21—Mr. McKenna gave the estimate at £4,500,000 rising, as he said, in two or three months or towards the end of the year to no less than £5,000,000 per day. And the Prime Minister gave at a later stage the information that the cost of the soldier had risen from £100 a year in peace time to £300 in war time. That is a remarkable fact, because as a rule in business if you multiply your output you reduce the cost per head; but here, with millions of soldiers with the Colours, you have the cost per head absolutely trebled.

Then take the question of income and deficits on income. The revenue for 1914–15 was £227,000,000 and the expenditure £561,000,000, leaving a deficit of £334,000,000. For this year the revised Budget was £272,000,000 and the revised expenditure £1590,000,000, leaving a deficit of £1,318,000,000, which, added to the deficit for last year, reaches a sum of £1,652,000,000 (taking us to the end of this financial year), which has to be raised, so far as we know, otherwise than by taxation. Then take the loans which have been raised to meet this expenditure—the loan of £350,000,000 last year, the loan in July of £600,000,000, and the American loan of £100,000,000, reaching a total of £1,050,000,000 raised by loan; and it follows clearly that you will have another £600,000,000 to raise by loan, or bills, or otherwise in the coming few months. The Chancellor of the Exchequer found it extremely difficult, of course, to give the exact figures for the dead weight of debt when he was then speaking, but he gave the figure at £2,200,000,000, including, of course, in that sum the pre-war debt.

This expenditure, as I say, has grown very rapidly, and it is probable, if you look to the further developments that are taking place in some parts of the world, that the expenditure will not be kept down to £5,000,000 a day, but will rise towards £5,500,000. But even if you take it at £5,000,000 a day, yon get for the coming year the stupendous figure of £1,825,000,000. It is interesting to compare this with our national income. Our national income is given by the statisticians a s varying between £2,400,000,000 and £2,700,000,000. Taking it at the lower figure and making the necessary deduction for the loss of productive power to the country in consequence of the number of men employed in military and other service, you find that the whole expenditure of the country for the coming year is closely rising up to the whole of the national income for a single year. That is a tremendous financial fact which we must have clearly in our minds when we are dealing with questions of economy.

I am dealing mainly with expenditure on the war, but I may be allowed, perhaps, to cast one glance into the future, because economy, if it is to be of value, must be commenced while the war is still in operation. I will assume that the war will end in June of next year. That is no doubt a sanguine expectation, but I base my figure upon that. By that time the war debt, at the rate of expenditure of £5,000,000 a day, will amount to something like £2,000,000,000, and I do not think it would be possible to put down the interest on that debt at much less than 5 per cent., which equals £100,000,000. Then take the Sinking Fund at 1 per cent.; there is another £20,000,000 to add. And we must add also a considerable sum for pensions to disabled and to dependants. I have here the figures of 150,000 dead and 200,000 disabled; and making all the allowances I can for those not married and so on it is impossible to bring down the figure under that head to a less sum than £20,000,000, and I think it is bound to be very much larger. So that without going into the question, which is too speculative, of whether, if the war ends in June, our naval and military establishments will be brought down to the figure at which they were before the war, there will be an addition to our national expenditure of £140,000,000. And when I point out that the Budget on the basis of present taxation will bring in only £305,000,000, it is obvious that there is not much chance of the taxation of the country being reduced for some time to come.

Looking to the factors which must determine the war, I think it has become more and more evident that finance has taken by far the most pre-eminent place. Apparently we are not to have in this war any of those tremendous and comprehensive victories which have ended past wars in a short time. The Germans built hopes on many of these successes in France and in Russia, but they have all failed; and I do not think we can look to any shortening of the war by any such dramatic finishes of the kind to which I have referred. Then there is the question of attrition. The noble and learned Earl, Lord Loreburn, gave us terrible figures on that subject two nights ago. But it is clear that the Central Powers are ready to risk the loss of practically the whole of their manhood of war age in this war. Therefore the prospect of an attrition which will really destroy the value of their fighting forces in point of view of men is such an indefinite time ahead that we cannot count on an early close of the war on that account. It really, therefore, must be a war of financial strength, an d as we occupy the strongest position financially of any of our Allies it comes to this, How can we preserve that position?

I need not remind your Lordships of this fact, that besides being our own bankers we are bankers for our Allies as well. We have financed them already to the extent of the large sums I have mentioned, and I believe that as large, or even larger, demands are now being made upon us in this connection. That differentiates the position at present entirely from the situation six or eight months ago. At that time we took far more rosy views of the early termination of the war than we do at present, and therefore we had less anxiety about finance. We were so comfortable about it that these questions were hardly pressed upon us. But now these gigantic sums are beginning to stagger our financiers, and we are beginning to see that great caution must be exercised in the control of our finances when the Prime Minister himself has told us that the position in that respect is serious. Moreover, we cannot expect any very immediate result or lay any immediate hopes on the collapse of the war owing to the giving way of the Central Powers. It is true that their finance is so arranged that one loan is raised upon another until an enormous edifice of paper is erected, but it is quite clear that they will go on with the war and with this financial gamble, and that any early terms of peace are impossible. As regards any hope of an early termination through the failure of supplies, that is a rumour we have heard before, but we ought not to pay too much attention to it at present. There are no doubt facts as regards the different quality of the men in the armies of the enemy which may give us hope, but I think it is as well, looking at the whole situation, not to assume that there can be any early giving up of the war through either the exhaustion of men, the failure of supplies, or even civilian disturbances in the countries themselves.

Do frank discussions of this kind do any damage to our cause abroad? We are a little frightened sometimes by being told that if certain statements are made in public there is great cheerfulness and elation in the German newspapers. That may be so. But if criticisms result in action, and in action which has the effect of bringing fresh pressure to bear on the hostile nations at d the hostile armies, I am inclined to think that the temporary dilation of the German heart has been rather cheaply bought. The present time, I think, is a good one for taking stock of our financial position as regards the war. We all know that we began with a small Army, and that we had to improvise in the early mouths of the war. Improvisation is always wasteful, and it was impossible, perhaps, to introduce much system into these early months. But we have now reached a point when we are able to form a closer estimate, not only of our resources, but of the demands that will be made upon them; and we are now able to call upon the Government to display more system than hitherto in the management of those finances.

Another point which arises is this. The surprises as regards the methods of the war are over. There was the question of the huge howitzers, the question of shrapnel against explosives, and the re-adoption of what we considered old methods of warfare. We now know the limits of Zeppelin and submarine dangers, and we know something of their antidotes. We know the quantities of barbed wire, telephones, and so on that are required. All these things, of course, had to be ordered at first in great quantities and in a hurry, and it was difficult to set up the new machinery to make them and deal with them. Now we are able to look more closely into the scope and nature of our national resources and the expenditure that we must meet.

Another point I should like to mention is this. Ought we to leave these matters uncriticised, and must we leave them entirely in the hands of the Government? Looking back to the record of the Government—and for this purpose one cannot very well distinguish between the old Government and the Coalition Government—it is quite clear that there are many points to which they have not been alive during the past year but to which their attention has been publicly called by criticism, with the result that they have, though perhaps with some natural resentment against their critics, at last adopted the suggestions that were made. That was so certainly with regard to aliens. There were disturbances in London which led to a more strict dealing with aliens. Then there was the whole history of cotton. Cotton was made contraband after a long controversy carried on in this House and in the other House, and there were conclusive reasons given against its being made contraband even within three weeks before the change was actually made. Alterations, again, have recently been seen in the Censorship; and it was only after thirteen or fourteen months of war that we discovered that the defences of London were inadequate to meet aerial attack. And the question of munitions is so fresh in your Lordships' minds that I need not refer to it.

No doubt Party is dead, but many of the old habits engendered through long years of peacefulness in Party government still survive. Governments are so accustomed to criticism that without it they very often do not do things which otherwise one would expect them obviously to do. I should like to ask this further, as an excuse for pressing the question of naval and military economy on the Government, Are the Government sufficiently serious in their action in enforcing economy? We have had experience of the recommendations of the noble Viscount's Retrenchment Committee. That Committee made a valuable Report and some strong recommendations, some of which were accepted by the Chancellor of the Exchequer and the Government and were presented to the House of Commons. But then we saw the old familiar habits and customs that. prevailed in time of peace. We saw Parliamentary pressure, we saw discussions in the Lobby; and then these useful and valuable economies which had been supported by the Cabinet. Were given away because of a little Parliamentary pressure in the House of Commons. Surely this was too great an importing of the old and worn-out habits of Party government when we are dealing with the more serious and terrible business of war.

Take, again, the question of imports. We have had some admirable lectures, if I may so call them without offence, from members of the Government to the effect that we ought to consume less of the articles that are brought into this country, but I am afraid that those lectures and those homilies have had very little effect. I take the returns of imports during October of this year and October of last year. In October last Year the imports were £51,000,000; in October this year they were nearly £68,000,000; and if you look at the analysis of these imports you will see that no less than £3,000,000 come under the heading of food, drink, and tobacco. The Government did attempt to deal to some extent with this question of imports, but in a very moderate, feeble, and unreal way. There were a certain number of duties proposed on imported articles, but a great many of them were reduced under Parliamentary pressure.

As regards the question of individual economy, which I had the honour of presenting to this House some months ago, it is quite true that the noble Marquess made a speech full of admirable sentiments and advice to the people of this country, but since then, as far as I know, nothing has been done, and that wise advice has not been forced upon the country as it surely ought to have been during the anxious months that have passed. I think if that advice regarding economy had been accompanied by a little more practice on the part of the Government it would have had much more effect on the people, who look rather to the actions of the Government than to their words. The Prime Minister himself has given very valuable advice on this question of economy, not only individual but naval and military economy as well; but his position, I am bound to say, reminds one to some extent of the part played by the chorus in Greek tragedy. The chorus gives forth wise maxims and comments in an absolutely irreproachable way on the action going on in the play, but it makes no attempt whatever to take part in the play itself or to guide its action.

Let me take one example. The noble Marquess, Lord Lansdowne, told us that new appointments were going to be most carefully and anxiously scrutinised before they were made. Then we found the other day that, very properly, a large number of temporary officials were got rid of from the Land Commission. But when those officials had been got rid of I suppose the kindness of the Government or some sense of remorse turned their hearts, for a circular was sent round suggesting that these gentlemen, who were only temporary officials, might offer themselves for certain positions as pail Income Tax Commissioners to be newly created in order to take the place of unpaid Income Tax Commissioners who had discharged their duties to the satisfaction of everybody. Therefore one is not impressed, if I may say so, by the past record of the Government as to their seriousness in dealing with this question of economy. Indeed, looking at the matter broadly, you have now substantially the same machinery for enforcing economy arid criticising expenditure as you had when your expenditure was £200,000,000, whereas now it is £1,600,000,000. You now control an expenditure of £35,000,000 a week with very much the same set of officials and in the same manner as when you were spending £4,000,000 a week, except that in many cases the control is less efficient than it then was.

I want to ask the Government this question, What real control or criticism does the Treasury exercise over naval and military expenditure? I quite understand that in time of war such control is far more difficult than in time of peace, and that these gentlemen may often be met with the saying "This expenditure is absolutely necessary for war purposes, and therefore you must have very little control over it." But I have heard it stated that absolute carte blanche has been given to the War Office, and that the control exercised by the Treasury in time of peace has been absolutely given up during the past year over war expenditure. I want to know whether there is any truth in the suggestion that that control has been so abandoned. I should like to ask this further question. We have been told by the noble Marquess, Lord Lansdowne, that our expeditions and strategical schemes are all based upon the advice of the military and naval experts; and Lord Robert Cecil, speaking in another place, told us that the Government always made plans very carefully for the schemes that they set on foot. I want to ask this. Are all these fresh expeditions and new puttings forward of our military and naval energy considered, not only with reference to naval and military or political requirements, but in relation to a general view of the whole of our financial position?

A tremendous strain —I quite admit it—is thrown on our officials in these great War Departments and on the Treasury. Although it is true to say that in time of peace many men of great ability went into our Naval and Military Departments, yet the great mass, of course, of the intelligence and ability of the country went into other careers and other professions; and these men who have risen to the top in finance, in trade, in. business, and in manufactures, as merchants and so on, form a huge reserve of ability. Now, of course, war has become the great business and has absorbed all other businesses. Can you say that in the business of controlling and managing your contracts and your military and naval expenditure you have concentrated that great mass of financial and commercial ability that you have in this country? Have you used it as it should have been used or have you rather relegated to those who were doing your business before these gigantic new problems which must exceed any experience that they had ever had? I am afraid there is but one answer. Although for certain advisory capacities you have made use of some men of eminence in these different careers, you have not employed them as much as you might have done, nor have you used their great experience in dealing with the vast problems which have been cast upon us by this entirely new situation of affairs.

I will take one instance. Everybody knows that the problem of the Exchanges with America has been a severe and anxious one. We buy very largely from America, and, of course, the price of what we buy is obviously very much affected by the state of those Exchanges. I am told that there is not at the Treasury any official who has had any long or intimate experience of these great questions. Surely there must be some gentleman in the City of London, somebody of non-Teutonic origin, who could come and assist the Treasury in these matters, not merely by advice, but, if you like, by being for the time an actual worker in the Treasury dealing with this subject. One does not want to be born a Treasury clerk in order to have knowledge of national finance. Those, I think, are the two general questions which present themselves —first, the question of control; and, secondly, the question of the larger employment of civilian ability in dealing with these great problems.

Owing to this lack of control, and owing partly to this lack of system, there is no question that you have had, as can be shown by examples, very insufficient control over expenditure, and I do not think I shall be doing justice to the case unless I give a few examples. A great many of these details will be dealt with by noble Lords who will follow me in the debate, and therefore I shall be brief on this part of the subject. It is only fair, of course, to give the Government credit for this, that they have made two changes which have very largely reduced expenditure from the military point of view. One is the reduction of the billeting allowance from 24 s. 6 d. to 17 s. 6 d,; the other is a matter which really amounted to a great scandal—the amount allowed to persons who were looking after horses which had been handed over to them to take care of. These persons were paid 35 s. a week: that amount has now been reduced to 23 s. 6 d., and I have heard no complaint that that sum was not amply sufficient to repay them.

I want to call attention to one or two reductions in expenditure which I suggest might he considered. The first may strike your Lordships as rather an unusual one, perhaps, but let me put it before you. It happens that a great many of the First Line regiments have had to send back to the Reserve regiments certain officers who were not so competent in military matters or for various reasons were not so efficient as the others. These gentlemen go back to the Reserve regiments, where they are promoted to be captains or majors and draw the pay of captains or majors, while their efficient comrades go abroad as second lieutenants or lieutenants and are so paid. The gentlemen who are sent back, whose very inefficiency is the cause of their remaining at home, get paid at a rate enjoyed by men who are taking all the risks in France or elsewhere and who have had fifteen or twenty years' service. Surely a state of things of that kind might be looked into. There is another point. Between 30,000 and 40,000 new officers have recently been granted commissions. We all know that it takes a long time to train an officer, and therefore it is wise to have a large number of supernumerary officers with our units. But these young officers are only under training, under probation. Is it right that while they are in this country they should be paid at the same rate as those who are trained and skilled and fighting for their country on foreign fields? There is another matter connected with the question of the pay of officers. A number of posts have been created in the last few months, or since the commencement of the war—semimilitary, or civilian-military posts—shall I call them?—at the War Office. These are filled by men who are given the rank of major or colonel, men whom one certainly had not previously suspected of any acquaintance with the profession of arms. You may see some of these gentlemen any day climbing the upper slopes of St. James's-street and looking very well in their uniform. It may be necessary that they should be given their present rank. But ought there not to be some honorary rank created for them—a rank not carrying with it the full pay of officers who have had twenty or twenty-five years' experience? So much for my suggestions concerning officers.

I should like to say a word or two about a subject which has been already debated in this House—separation allowances. The separation allowances were fixed at a very high figure. Had we six or eight months ago known the extent and scope of this war and what millions of men we should have to put into the field, I do not think the Government would have fixed the scale of allowances at the rate at which it was fixed. The result has been, of course, that we have far more married men than we ought to have in proportion to the number in the Army. That may be corrected owing to the new regulations which Lord Derby is making under his scheme, and no doubt the high scale has had the useful effect of bringing about marriages which would not otherwise have taken place. But is it right, when your expenditure is so high, that by joining the Army in this way men should be put in so many cases in a far better financial position than they were in when in civil life? These high separation allowances have resulted in a great deal of fraud. The other day there were something like 1,000 cases of obtaining fraudulent separation allowances. Very few of these persons have been prosecuted, but surely a severe punishment ought to be meted out in cases of this kind. I do not know whether it is too late in the day to review the question of separation allowances, but at least it is a matter that might be carefully considered by the Government.

The next point I want to say a word upon is this. Far too many men have been attested and enlisted and trained for a certain number of months in this country who, a very short time after they were sent abroad, were returned because they never could make efficient soldiers. Many of them were men who ought to have been discharged before in this country. But a great many men, through too lax medical inspection, have been brought into the Army suffering from various defects which have been brought out by the tremendous strain of war. And what have they cost the country if they have been trained for six months? According to the Prime Minister's scale, there has been a loss under this head of £150 per man. I should like to know, if the noble Lord who represents the War Office intends speaking in this debate, whether he can give us any official figures showing the number of men passed into the Army with these defects who have had to come back after a short time because they were unable to hear the strain of war. I know the case of a hospital which was absolutely full of men, from various regiments, all suffering from long-seated defects. Not one of these men ought ever to have been passed by the recruiting authorities. One has some compassion for those who are anxious to get recruits, but surely at this waste to the country such men ought not to be recruited. An immense amount of money has been spent on recruiting parades, processions, and so on. I know of one case where £30 was spent on one of these performances in order to get two recruits but, unfortunately, neither of them was able to pass the medical examination, so that in that case the £30 was absolutely thrown away. Colonels are permitted very large sums of money to deal with recruiting. They have a credit of £100, and when that is exhausted there is another credit of £100, and so on, and I believe many recruits have been purchased at a far higher sum than that.

There is another question as regards wages and payments. I quite understand that with a voluntary Army you must deal with market prices and pay a higher rate than if you were able to exercise compulsion, but I think the wages that have been paid, in the technical trades especially, have been out of all proportion compared with what these men were earning in ordinary times. I can give the example of a chauffeur who was getting 30s. a week —he was not my chauffeur, for I pay more than that—and who was perfectly well satisfied with his position. He was brought in to do some work for the Army and received £3 a week. Surely it is quite possible to get men like that at the market price, or a little over. Let me give another instance. Only yesterday I was talking to an eminent surgeon friend of mine who was lamenting the fact that it was so difficult to get house surgeons for the hospitals in London. I said, "How is that? How much is a house surgeon paid?" He replied that you could get a very good one in ordinary times for £200 a year, but he said the Government were offering them £365—£1 a day—so of course it was impossible to get them for the hospitals. I submit that for a less sum than that you would be able to get these useful and skilled professional assistants. But there seems to have been no effort all through to consider these matters from the point of view of the market prices.

Take another case connected with the building of huts and so on. A large number of huts are being constructed round Salisbury, Bland ford, and Winchester. I believe these were erected by different contractors. Anyhow, there has been tremendous competition among them and considerable outbidding for the services of workmen; the result has been that workmen have been travelling to and fro, and there has been a great deal of waste in unnecessary travelling of that kind as well as in the higher wages that have had to be paid. In barracks and huts in this country there is at present accommodation for 1,200,000 men. Is it necessary largely to increase that huttage, which I believe is one-third more than the whole accommodation for men which existed in Germany before the war? As so many of our men have now gone abroad I think we might be satisfied with the very large amount of accommodation that has already been erected Then as regards contractors, there has been a very large amount of competition which has driven up wages. Everybody, of course, is glad in normal times that wages should be as high as possible, but when the nation is spending £5,000,000 a day surely a little more care should be taken. I am informed that for Army work in Huddersfield the contractors were paying a considerable amount. above the ordinary rates. Similarly I understand that at Gretna Green the high rates there paid have upset a good deal of the Scottish market.

As regards the question of waste in rations, I am glad to see that after fifteen months of war the attention of the War Office, according to an answer given in the other House by the Financial Secretary, has at last been turned to this question, and the absurdity is being realised of granting rations according to the men on the strength and not according to the number of men there to consume them. Take the case of the waste of bread at Leicester. Positively a large number of civilians have been fed there with bread at the expense of the country, because of the large rations which the men themselves were not able to eat. Rations were given away or sold to the people, and the unfortunate bakers in the place were practically ruined by these mountains of bread coming down on the top of these troops from the Government. There is a very bad effect, of course, from all this, bearing on the question of economy with which the noble Marquess dealt, because, seeing this waste going on—and it has been going on not only in Leicester but in many villages in England—the people themselves naturally do not imagine that there is any serious duty upon themselves to economise. If this example is set them by the Government why should they be wiser than the Government, which represents most of the political talent of the country? Then as regards the waste and destruction of stores. When a division leaves its camp to go abroad there is a vast destruction and waste and burning of stores which might perfectly well be used. The other day there was a case at Witley Camp where thirty or forty persons were accused of selling goods after the division had left the camp.

Then the whole question of contracts and commissions wants seriously looking into. A great deal of difficulty has arisen through the fact that the gentlemen who deal with these contracts have not that inside knowledge of the markets or that commercial experience so absolutely necessary in dealing with contracts on a large scale. I was given a case the other day by a friend of mine who is deeply concerned with, though not personally interested in, these matters, as regards waste in the purchase of tea. The market is dealt with in such a manner that there is constantly a rise when the Government has to buy, followed by a fall in the market when those who generally deal with it want to get their tea. This is due, not to any fraud or unfairness, but simply to the fact that you have not men with the necessary experience to deal with these matters.

There is, in connection with contracts, a very serious question coming up which may affect the price of contracts all over the country. We are approaching what is called the second cycle of war bonuses, and I believe the office of the Industrial Commissioners Department is flooded with questions of negotiation and arbitration to settle these new rates which are being demanded largely owing to inequalities and difficulties that have arisen through settlements made by the Government during the last few months. Our contracts are spread all over the country, and the contractors must add to fresh contracts the rise in wages occasioned by these increased bonuses, and this will run not into thousands but into millions of pounds.

Let me ask one very important question with reference to the Ministry of Munitions. As we know, the Ministry of Munitions was set up in order to deal with contracts as regards the supply of munitions. I want to ask, What is the position of the Ministry of Munitions? How is it controlled? Does it act merely as a contracting department for the War Office—that is to say, has it simply to buy what is ordered by the War Office? Or has it a freer hand? Is it able to deal beforehand with large amounts, to store up quantities of shells, guns, and so on, without reference to the definite orders it obtains? I cannot help thinking there must be necessity for looking into the affairs of that Department. At least I am informed that posts to the extent of no less than £100,000 a year have already been created, and not one of those posts has come under the control of the Treasury or any other body. I do not know how far it is true, but I am told that orders to the extent of hundreds of millions of shells have been placed in America by that Department. I want to know how it is composed. Has it the knowledge, the experience, and the ability to spend in that difficult market these vast sums with economy and careful control? I will give one instance only—it is a case which I happen to know—of the kind of salaries given in that Department. A young man who was getting 30s. a week before was able to marry the other day, and he was able to marry because he had got a post in the Munitions Department, not at 30 s. a week, but at £ a week. This seems a substantial rise for a gentleman who is not extraordinarily endowed with ability. I am not going to inflict any more of these instances upon your Lordships. 1 think I have said enough to show, first, there is an absence of system, and, secondly, that that absence of system has resulted in many cases in a great deal of waste and excess which might have been saved.

Now what suggestions can he made as to a remedy? Is another Committee or Commission to be appointed? I can dismiss that with a word. I do not think the noble Viscount, Lord Midleton, would be very glad to serve on another Committee of Economy, and if the recommendations of a new Committee were dealt with with the same contumeliousness as those of the previous one I think it would be waste of time for anybody to sit upon it. Or should the subject be dealt with by a Committee of the Cabinet? There have been differences of opinion as to what the size of the Cabinet should be—whether the membership should be twenty-two, twelve, or five —but I do not think anybody has doubted that this Cabinet has had a greater fertility in the production of sub-committees—nearly fifty—than any Cabinet in the history of this country, and I should be very sorry to add the fifty-first. Moreover, Ministers are very much occupied with the business of their Departments, and no doubt cannot spare the time for maultitudinous immersions into matters of financial detail.

I suggest that you should make use of some of the ability you have outside official surroundings. You could take two, three, or five men with great experience in commercial and financial affairs and associate them with some official who has had experience of the difficulties and intricacies of Government. Departments, and where they thought that lack of economy or lack of system exists they could report to the Cabinet. There is, of course, the danger that their reports might be taken as little notice of as other reports. I therefore suggest that if after a certain time no attention is paid to their reports they should have the right to report direct to Parliament, in order that Parliament might have direct cognizance of this matter.

There is one other suggestion I should like to make. I recognise the difficulty in time of war of Treasury control over expenditure, and it may be that very useful control could be established inside the Offices themselves. There is now a Financial Committee at the Admiralty which has done, I believe, very valuable work in reporting directly to the head of the Admiralty on certain expenditure, and which has done even more valuable work by calling the officials of the Admiralty before them and cross-examining them on certain estimates of expenditure; in that way they have exercised inside the Office very useful and valuable control. Could not some similar arrangement be adopted with regard to the War Office?

In conclusion I earnestly urge the Government to give this matter of naval and military expenditure their fullest attention, and I sincerely hope that my Motion will not be met by the well-worn phrases current in peace time such as that "the matter shall be considered," or that "the matter shall have our earnest attention"—phrases which run so easily from Ministerial lips in times of difficulty. I hope that the Government will give graver attention to this matter. After all they have a splendid example in our men in the field. We all admire the courage and resolution with which those men face their difficulties. All I ask is that. the members of the Government in their own spheres should face these financial difficulties with equal courage and with a no less measure of resolution and energy.

Moved to resolve, That, in the opinion of this House, it is the duty of His Majesty's Government to exercise a more effective supervision and control of naval and military expenditure.—(Viscount Peel.)


My Lords, I do not think the time of this House could have been more usefully employed than it has been this afternoon by the discussion of the all-important question of finance. Whatever may be our commitments by land or by sea, whatever may be the dangers, risks, and liabilities attending them, overriding all is this great financial question that we have to face. Upon it hangs everything in the future. In fact, I do not think I shall over-describe it if I say that the financial question is the keystone of the arch of the future. We have had an admission, in a recent speech by the Prime Minister, that he regards the financial situation as serious. He pointed out what it was that was dependent on the maintenance of our financial equilibrium. In the first place, the keeping up of the supply of men in the field; secondly, the provision of an adequacy of munitions, not merely for our own purposes, but also on behalf of our Allies for whom we have taken the responsibility; and, thirdly, the maintenance, of that financial assistance to our Allies which again appears to be an obligation that we have shouldered—I suppose we have been compelled to shoulder it. They are a sequence of necessities upon which the final termination of this war depends, and each in its turn is dependent, as I said just now, on the maintenance of our financial equilibrium.

In relation to these matters to which I have referred—men, munitions, and financial assistance to our Allies—we cannot say at any moment that we have reached the maximum figure of liability, because we know perfectly well that it will be a recurring and an increasing liability. More men will have to be provided, and we know now what the cost per man is estimated to be. I suppose 1,000,000 or 2,000,000 more men may be provided. Take 1,000,000 men. That will incur on the country an increased burden of £300,000,000 in a year. As regards munitions, the more men we and our Allies are responsible for the greater will be the expenditure on munitions. As regards the continuing obligation to finance our Allies, that of course will go on to the end of the chapter as long as our resources will stand the strain; and the figure that was mentioned by my noble friend Lord Peel—the last figure we had, £423,000,000—I expect in the near future will be very much further augmented.

My noble friend Lord Peel dealt with the startling growth of expenditure. He reminded us that a few months ago we were told that the daily outgoings were £3,000,000. I think the country was fairly well shocked when that figure was revealed, but within a few weeks later we learned from official sources that the expenditure has grown to £5,000,000 a day. I should not like to call that the up-to-date figure. I should think—and I invite whatever noble Lord is going to reply to enlighten us upon this point—that the up-to-date figure is something more than £5,000,000 a day. The noble Viscount went into a detailed criticism of points which have been before the minds of many of us during the period of this war. I am not myself going to follow him in that direction, but will endeavour to address myself to this question in its true financial aspect.

How is the increasing financial burden to be met? First of all, out of our national resources. It is obvious that the Government must continue to resort to further borrowing. I fear they will have to resort to further increased taxation, and possibly, as things get tighter, to forced loans—to calling upon those who have the money to put it up whether they like it or not. That should be kept clearly before our minds. Those are the possibilities of the near future. As regards further borrowings, I do not say it is an open secret, but still there is on the part of those whose business it is to follow finance a very fair predication that there will be a further Loan issued not later than the month of January. "Coming events cast their shadows before"—and I think there is a Vote on Account being asked for to-night in the House of Commons. In connection with the last Loan there was a condition inserted in the prospectus to the effect that participators in that Loan would have any advantages which might be given in any future Loan. That is to say, supposing that I subscribed for £100 of Four-and-a-Half Per Cent. Loan, at par and that in the course of further issues the Government brought out a Four-and-a-Half Per Cent. Loan, not at par but at £90, I should not be worse off because I had subscribed to the original Loan, but would be able to redeem my first Loan at par and therefore be able to participate in the more advantageous Loan—more advantageous to the investor but less advantageous to the Government. The result of future issues will most probably be that the rate of interest will be increased. The Government have had their Loan so far at 4½ per cent.—they had an earlier one at 3½ per cent. I am afraid that circumstances will compel them to raise the rate of interest, and therefore there is a possibility that this vast stun of £650,000,000, upon which the rate of interest is 4½ per cent., may be converted and placed upon a 5 per cent. basis. I only draw attention to this to invite a reply front the Government as to whether they are considering it in their financial provision and prevision, because it is upon prevision especially that the future finances of this country so far as the Government are concerned will so much depend.

I have said a word as to how the future financial requirements of the Government are to be met out of national resources. But there is, I do not say a more important, but an equally important, question which cannot be lost sight of, and it is this. How are we to maintain our credit abroad? In normal times, of course, so far as the United Kingdom was concerned, our oversea trade has been carried on easily without any impediment or embarrassment; it has worked with the ease of a well-oiled machine. Nobody has troubled to ascertain the reason why, but has been satisfied that that was a normal condition of affairs and for ever likely to continue. That was so by reason of the fact that there has always existed an equilibrium as between the volume of our imports and our exports. Take the figures before the war. You might say in round figures that the value of our imports was £2,000,000 sterling per day and the value of our exports, in round figures again, about. £1,750,000 per day. The actual disparity, according to the statement. made by the Prime Minister, has increased from £11,000,000 per month to £30,000,000 per month, and I am inclined to think that we shall see it. even in the immediate future very much greater titan that. Anyway. whatever may have been the position which led to that easy working of our trade, that has all been changed by the war, with the result that our credit abroad is seriously affected. That of course, arises from the fact that there is an excess—an enormous and growing excess—of imports as against exports. Our exports have been crippled to a very large extent by freights, which have risen from the scarcity of shipping. When one considers that of the whole of our vast Mercantile Marine the Government have taken up, I think I am safe in saying, not less the n one quarter one can easily realise how it is that freights have risen to such an enormous figure. I am not suggesting that it entirely arises from this fact. Supply and do demand are factors that govern prices everywhere and will continue so to do, and if you have a limited supply and a large demand those who have the power put into their hands to meet it can always make the best of the situation. This excess of imports has led, for example, to the difficulties in the rate of Exchange in the United States of America for the self-same reason that I have just referred to as regards shipping. It is governed by that old and constant factor which determines and always will determine prices—namely, supply and demand.

I would like to trace for a moment, to make it quite clear, the operative effect of supply and demand on Exchange. Take the merchant, the shipper in the United States who has, say, wheat to sell and has a buyer on this side. For reasons of finance he cannot afford to be out of his money. He may be shipping tens of thousands of pounds worth of goods. Therefore commerce has improvised a method whereby he can get the value of his goods before they are shipped. He draws a bill on the consignee, his customers; and the consignor, the owner of the goods, before the goods are sold, takes his bill to the Bank and sells. it. Then comes the question of the rate of Exchange. In normal times the rate has been normal too. It has stood in America as long as I have known American commercial concerns, and that is a long time, in the region of $4.86c., and that has been the real valid equivalent of the English pound sterling. The thing has been kept upon a fairly normal basis because the volume of exports and imports have about balanced, and there have been free buyers and sellers of exchange on London at the same time. But at the present moment the position is entirely different. Of course, the bills have to be bought but it is not a free market, with the result that where a man is being pestered and pressed to buy in increasing volume he becomes the master of the situation and dictates his own terms. That is why the rate of Exchange has fallen until it has got as low as $4.50 and I am not certain that it is not lower than that. But the seriousness of it is this, that the buying capacity of the pound sterling has seriously diminished. Supposing a man when the rate of Exchange was normal at $4.86 he could buy for £100 one hundred tons of any commodity now with the disadvantageous rate instead of getting one hundred tons for his £100 he would probably have to put up with ninety tons, or, if he wanted a hundred tons to pay £110.

There is another thing that plays on the rate of Exchange and that is the question of confidence. I am told by those who keep in daily touch with the fluctuations of the rate that Exchange is influenced by the news as to how we are doing in this war. For example, if we were to have news tomorrow of a great success Exchange would respond to it and would have an upward reaction at once. On the other hand, if we were to have depressing and bad news the contrary would be the result. I was shown figures yesterday to demonstrate that the effect of the optimistic speech sometime ago of one of our leading Ministers, who prophesied with great confidence certain fruitful results which were. to be expected in a few weeks from our operations in the East., was that the rate immediately, as showing the value attached to the prophecy, bounded upwards. But Exchange itself has learned wisdom in the last few weeks, now that it has found that those optimistic predictions are totally unreliable. I do not think the word of a Minister would now have the slightest effect in that way. But no doubt happenings—that is to say, successes or depressions—will continue to have an effect. in the way I have related.

I have not recited all these matters without an object, and my object is this. I am concerned in endeavouring to ascertain whether we are facing the situation, whether the Government are really taking seriously into view all these possibilities and the necessity of maintaining at all costs our financial stability. I was told yesterday by one of the most competent authorities in this kingdom—it is a common sense fact to any one who likes to think it out—that we cannot go on indefinitely and maintain our solvency. There are lots of people in this country who do not and will not recognise that. They have their heads in the sand, metaphorically, and believe that our pocket is bottomless and that, come what may, we shall go on to the end without any very serious financial embarrassment. I would recommend each member of the Government who has au office or a bureau to write these words up in it so that they may confront him every morning, "The country cannot go on indefinitely and maintain its solvency." We shall want more money in the future, and, to use Lord Kitchener's term applied to men, "still more" money. Although we may anticipate that the next Loan whenever the time comes for it to he issued will be subscribed, I do not know that we can hope that it will reach the stupendous figure of the previous one. But what of the next Loan after that, and possibly the next after that? That is what the Government have to consider.

I come to the question of what we can do. First of all, we have to maintain our credit abroad. Of course, we can export gold, if we have it to export, to meet the adverse balance. We can sell our foreign securities in the countries to which they belong. This we are doing to a very large extent. But when you have sold them you cannot sell them again, because you have not got them to sell; so that this is an effort in aid which sooner or later will come to an end. The banks are freely selling their American securities in the American markets, but, having sold them, they cannot sell them again. Then there is the possibility of further foreign Loans. The only country available to us where we might raise further Loans is, I think, the United States of America. Well, there has been a good deal of fuss in connection with the issue of the American Loan. It is a mere palliative—a drop in the ocean—a mere £100,000,000. I should have thought more of it had it been £500,000,000. But we have gone out and made a great to-do and brought home £100,000,000. The rate of interest is thought by some to be very high. I am not competent to express an opinion as to that. People who talk to me about these things think that in the earlier stages we might have raised very much more money in America on a 4½ per cent. basis had we allowed it to be free of Income Tax. But that is past redemption, so I lay no stress on that myself.

There is one other point—the stoppage of all imports not essential to our existence. There are, of course, any amount of imports representing foodstuffs, various kinds of food products, without which we could not carry on, but I had the curiosity just before I came to the House to turn up some of the returns of imports that have come into the Port of London, and I looked clown the list to see what sort of a collection there was of things that I have no hesitation. in describing as non-essential. In the Port of London alone I added up £23,000,000 worth of such articles coming in, and I should think that if you take the whole of the ports of the United Kingdom the amount might. be increased to £50,000,000 or £60,000,000—that is, of imported goods absolutely non-essential. We could do without. them to-morrow morning if the Government had the courage to close the door against them. Let me enumerate some of them. Here is £238,000 worth of aerated and mineral waters. We can do without foreign mineral waters—bearing in mind that this has to be done, otherwise we shall meet that terrible position that must arrive if the war is prolonged. Chinaware and pottery to the extent of £270,000; embroidery and needlework, £1,000,000; feathers and down, £323,000; hardware, £368,000; hats and bonnets, £270,000. Your Lordships are familiar with the last-named item, because the Chancellor of the Exchequer started out to tax head wear, but afterwards abandoned the idea. Jewellery, £118,000; cinematograph films, nearly £400,000—


What period does that cover?


These are imports into the Port of London in 1914.


For one year?


Yes, for one year. Gloves, £360,000; matches, £314,000; musical instruments. £275,000; perfumery, £93,000—not a very big item; pickles, £107,000; pictures, prints, drawings, and engravings, £216,000; tobacco pipes, £68,000; plants, shrubs, trees, and flower roots, £240,000; shells—these are not the shells that are so much in requisition just now, but seashore shells or shells that grow on rocks, ornamental shells, mother of pearl and that sort used in decorating various things—544,000; silk and silk manufactures, £5,213,000; skins and furs, £4,352,000; stationery, £186,000; toys and games, £213,000; and last—a commodity that has been very much diminished in consumption at this moment, I think—wine, £1,738,000.

I suggest that here is an absolute direction in which the imports can be seriously curtailed. The Prime Minister, in his speech the other day, made an appeal to the people to diminish their consumption of luxuries, and at the same time to discourage the consumption of goods that were included in our imports. The Prime Minister used these very words— We cannot go on discharging our indebtedness unless the most strict and rigid economy is exercised and all unnecessary expenditure avoided. I do not think the appeal to the nation at large to exercise economy is likely to be successful until the Government themselves lead the way. Hitherto—and I am not saying this in any offensive or critical sense, for I recognise that it is best not to assume that line on any occasion, certainly not in these times—I have not seen the slightest glint on any action on the part. of the Government in the direction of economy. They have shown us no example. No doubt they have their own case and can make their position good, but I shall be glad to hear what in the last few months, since public attention has been directed to this enormous expenditure, they have as it were on the credit side in regard to diminution of expenditure. 1 shall be delighted if they can reveal something to us, though I shall be surprised if they can reveal very much. On the question of reducing imports I will ask the noble Marquess, Lord Crewe, to give us his mind on this all important question, Have the Government considered whether they cannot automatically bring the import of non-essentials to an end by closing the ports of the kingdom against them? If so, they will have taken a very valuable step in the direction of redressing the adverse balance to which I have referred.

I want to draw attention to the obvious and gross waste of public money in many directions for which the Government are responsible and into which they Avert with their eyes wide open. The noble Viscount, Lord Peel, referred to the question of separation allowances. I had the honour of being the first in Parliament who succeeded in drawing from the Government the cost of the separation allowances. There was an attempt made to elicit it in the House of Commons, but they have not there the liberty and licence which we enjoy and which we so much appreciate and which during this war is acting se beneficially. I know that before the information was granted to me there was sort of battle royal between the members of the Government and the hierarchy at the War Office as to whether it should he vouchsafed. It may be a. breach of confidence on my part—I do not say who told me—but I know it as a fact that there was the most stubborn resistance to giving the figure at; that is, the figure of the separation allowances and allowances to dependants. I alleged that these allowances cost £1,000,000 a week. Finally it fell to the lot of the noble Lord, Lord Newton, to convey the information, and although I think his sympathies were all in one direction I suppose he thought it was the etiquette of a Minister so he accused me of exaggeration, but I suppose be was smiling internally all the time and did not believe it himself. He said £1,000,000 was an exaggeration, and that the real figure was £840,000. That was a few weeks ago—at the end of July. What do we know now? In the House of Commons the information was dragged out that this expenditure has increased to £1,250,000 per week. I really cannot believe that if the exact figure was £840,000 a week in July it can have increased by the middle of October to £1,250,000. Of course, it has not. I was not the exaggerator; the noble Lord was the concealer, but not of his own free will. He gave us the best information that was available.


I did not conceal anything.


I am sure the noble Lord never would under any circumstances. But the figures that were revealed to him as the official spokesman of the War Department were not the whole story; they left out something. But, I make no complaint. I only refer to it. In this connection I feel—it is rather a risky thing to say, but, I do not hesitate to say it—that this question of separation allowances should be susceptible of reconsideration. What do you find? You find that shoals of families are now receiving week by week an income very much in excess of that which they were enjoying when the head of the family was at home and at work. By no process of argument can that be justified. I have not the slightest hesitation in saying that no family should receive more than they were receiving before the war.

Consider how unfairly this acts. Take an agricultural labourer who received, say, 18s. a week and has a family of, say, six or seven children—not an infrequent case.

He elects to go to the war. His wife immediately receives an income of 32s. 6d. a week. That cannot be right. He gets 12s. 6d. for the wife, 5s. for the first child, 3s. 6d. for the second, and 2s. for each of the remainder. But out of the same neighbourhood there may be a clerk who was probably in a brewery or a solicitor's office and in receipt of, say, £4 a week, and who is married with two children. He goes to the war. What does his wife get? She gets 12s. 6d. together with 5s. for the first child and 3s. 6d. for the other, and nothing more. So that within a mile you have an agricultural labourer with his income doubled, and up in the adjoining town you have the wife of a man who lived in a better condition in receipt of one-fourth or one-fifth of the income enjoyed before the husband joined. I suggest that the Government should have the courage to recast that situation. If they are courageous men—and I hope they are—they certainly ought to reconsider it. The net result would be a saving of £20,000,000 to £30,000,000 a year to the State.

One word with regard to the enlistment of soldiers. I should have thought that when a man joined the Colours he was on an equality with every other soldier. That is not the case at all. A young fellow with plenty of pluck leaves an employment such as that with which I am associated—the Port of London Authority—where he was getting £4 or £5 a week and becomes what we call colloquially a "Tommy," and he gets the pay of a "Tommy" fourteen pence a day. But some half-trained driver of a motor-car, possibly from a deficiency of pluck or from a desire to get the money that is going, decides to join the Mechanical Transport Service, and off he goes with six shillings a day. He is a soldier enlisted under the same Act, the same terms, and the same conditions. But the other man is liable to work at the most difficult job—that is, to take his place in the firing line—and yet he gets only fourteen pence a day. Will any Minister give a justification of that? I have tried to think it out for myself, but I confess I have utterly failed to find any justification.

Believe me I am raising all these matters simply because I recognise the serious possibilities of the future. We cannot continue to maintain our solvency unless we look at these things carefully like a man in a business has to do when he has to make ends meet, and consider at every point where a fraction can be scraped off any expenditure. The pay sheets on the naval and military side—and on the civil side too, for the matter of that, but I am more immediately concerned with the naval and military side—should have the most careful security and overhauling. It would be revealed that there are men on them who are of no fighting or other value whatever. I am perfectly certain that there are shoals of men at this moment living on the public purse who arc giving no adequate return in service. I drive up here generally at about four or five o'clock and I see some queer and ancient customers walking about in khaki—of course if they are rendering honourable service all credit to them, and I have nothing to say—but I cannot help remarking, and many of my friends agree, that they look the most unlikely men to be the recipients of funds from the public purse. But I may be wrong, and I am not casting any aspersion on anybody. I do say, however, that the pay sheets should be most carefully and rigidly scrutinised to see whether there are not men hanging on, as it were, to the public purse. Of this I am quite confident, that there are any number of men who, having retired on pensions, have returned to the Army Navy filling some home billet; they have come back and have reverted to the pay of their rank, or have had a step up in rank since they came back, and are still enjoying their pensions. I say it is absolutely wrong that any man should be allowed in these conditions to draw his pension and the full pay of his rank. I assert that that is happening; it is not a speculative assertion, but is based on the best possible information.

I was going to ask whether the Chancellor of the Exchequer's Committee were considering all these matters of the kind that have been brought forward in the debate to-day. But, of course, it is no use asking the question if the Committee has ceased to be operative. Strangely enough, Lord Peel made the very suggestion that I was going to make. To ask for a Committee under official guidance or control would be a waste of time. The place is full of such Committees. But I honestly believe that if the Government would allow three, four, or five business men—I mention the term "business men" with a certain amount of trepidation because the noble Marquess, Lord Crew, on some previous occasion rather scoffed at the consistency with which this term was used—but I mean the real thing, well-trained business men with reputation and experience—I believe that if you were to establish a Committee of that kind, free from official control, with power to report direct to Parliament, they would dig out and reveal things that would astonish us all. But to ask a man to come and sit under the conductorship of a Minister would be only a waste of time, and I do not think many business men would give such a proposal serious attention. My last word is this. We cannot go on indefinitely and maintain our solvency. Therefore the situation is one of great gravity, and I am glad that Lord Peel has had the good sense and the courage to give us the opportunity today to discuss this all-important question of finance.


My Lords, I echo what was said by my noble friend Lord Devon-port in regard to Lord Peel. I think it is a very good thing that he has brought this matter before your Lordships' House. Whatever may be the opinion of the Government, spearing as one who is to a considerable extent connected with commercial affairs in the country I feel no hesitation in saying that the financial situation at the present time is causing a great deal of anxiety. His Majesty's Government do not seem to have really grasped our financial position. I think that what was said by my noble friend Lord Peel—namely, that the Treasury had practically given up the control of expenditure so far as naval and military concerns went—is true. I cannot believe for a moment that the waste, the extravagance, the reckless expenditure which has taken place throughout the country in connection with military affairs has not startled all members of your Lordships' House. In our own localities we see what is done. There is hopeless extravagance, showing perfectly clearly that this expenditure is not carefully watched over by the Treasury, as it ought to be. When I look back on my awn Parliamentary days I remember how important it was always considered that the Treasury should control expenditure, and I await with interest the answer which is to be given by the Govenment to Lord Peel's question as to whether the Treasury has given up controlling the. expenditure in connection with military and naval affairs.

Our financial resources are of as much importance in the bringing of this war to a Successful issue as anything else. I cannot estimate what may be the financial resources of our enemies, but one thing they seemed to realise very early was that it was very important that they should Conserve their resourcesso far as they could. The war had not been commenced a week before the whole financial situation and the question of the food of the people were gone into by the enemy. In fact the whole resources of the German and Austrian Empires were considered, because they realised in good time how important it was that they should lose nothing for want of judging what was coming in the future. I am afraid, even though the war has been going on for something like sixteen months, that His Majesty's Government have not yet appreciated to the full extent the necessity for adopting the same course.

I was very much interested in what was said this evening with regard to the calling in of business men. I cannot understand why His Majesty's Government have not made greater use of the business experts of this country in connection with various matters during the war. The Germans availed themselves of business men. They had the best men called in, not only to be consulted but to act, many of them being given full authority to deal with all contracts, purchases, and sales which were made on behalf of the Government. On our side we do not seem to realise the necessity for that, and I largely attribute to that the great extravagance which has been going on and the great misfortunes which have taken place in connection with our contracts and our system of commercial dealing for Government requirements. The proposal made by Lord Peel is, I think, to a certain extent a good one, and I cannot see why Committees should not be formed of four or five business men in each Department dealing with contracts connected with the Navy and the Army. But if you want the best business men you would have to give them power to deal with these contracts independent of officials. The requirements of the Army and Navy might be put before them, and then they would buy to the best of their ability. I feel quite sure that in the hands of business experts we should find that many millions of pounds would be saved, and that the quality of supply in the various articles which the Government require would not fall short of what it ought to be.

The services of business men have already been utilised by the Government in certain Departments. In connection with munitions Mr. Lloyd George, finding that he could not deal with that himself, called in business men. I have not the slightest hesitation in saying that some of the gentlemen who are acting for him are amongst the very best business men that he could have got, and that to a large extent they will contribute to success so far as munitions are concerned. Why this should not be done in connection with the Army I cannot understand. At present there is no efficient control in connection with military expenditure. I am the last person to suggest that any expenditure should be spared if it is necessary for efficiency; but what the Government should see is that they get value for their money, that there is no more money spent than is absolutely necessary for the efficiency of the Army and the Navy, that the taxpayers' interests are carefully protected. I am afraid that has not been done. The cases which are put before me —with which I shall not trouble your Lordships—are appalling. I can use no other word for the waste that goes on. Many an organisation might be devised to improve the situation even during the war. Why cannot the Government trust the commanding officers better? I heard the other day that a commanding officer had stated that an inspector came down to examine his equipment and said it was necessary he should have a new one. The commanding officer said the equipment was all well oiled and in excellent state, but the inspector insisted that he had to have a new one, and I am told that that new equipment has been supplied to the whole division. The commanding officer said it was absolutely unnecessary. Surely there ought to be greater confidence put in the commanding officers of our troops. If you were to trust the commanding officers more it would, I believe, result in much greater economy.

I am afraid there is at present the same red-tape system with regard to military matters as existed during time of peace. The military authorities do not seem to realise that the organisation for all these contracts is of quite a different character from what it was in time of peace. You want men at the head who know what they are doing, who are experienced in business and can make up their minds at once and act immediately. Very good results would arise from it. The Government themselves are largely to blame for much of the expenditure that goes on, and I endorse what has been said by previous speakers—namely, that the Government do not set an example to the country on economy. Take the case of shipping. I am certain that had there been a Transport Committee composed of four or five first-class shipowners to deal with these transports, to say what ships ought to be taken and what alterations should be made to those ships, many millions of pounds might have been saved to the Government. The stories I hear of alterations ! Ships are said to be pulled all to pieces to be made into transports, and that then it is found that they are not required, and they have to be altered back again. I cannot help thinking that there is gross negligence and gross incompetence in connection with matters of this kind, and I am certain that, were there a satisfactory Committee to deal with this question composed of capable shipowners the country would have had very great benefit. You talk about higher freights. I am informed that the Government have commandeered something like 3,500 ships of various kinds. I have had several ships commandeered, and I know that these ships are not doing half, in some cases only a quarter, of the work they might do. With what result? The Government are paving enormous sums simply for having a ship doing one-half or one-quarter of its work. Consequently other people outside the Government who want ships cannot get them. Therefore up go freights. The Government have contributed more, in my judgment, to the great rise in freights than any one else. If the ships they have commandeered had been properly managed and controlled the freight market would not be in the excited condition in which we often see it.

I understand that His Majesty's Government have given orders that British ships are not to carry cargoes from one foreign port to another. I think if they were to take such action as I suggest that might not have been necessary. It is a loss to the country, because these vessels are earning very high profits at the present time, and the Chancellor of the Exchequer is getting 50 per cent. of them besides a large ordinary Income Tax on the remainder. So that the Government have a direct interest in allowing ships to make as much as they can in any part of the world. I think these are matters that the Government do not sufficiently take into consideration. I am certain that if they persist in what they are doing it will simply mean that they will throw all the trade into the hands of neutral shipowners. And it upsets business. I quite admit that in time of war it is sometimes necessary to upset business, but business should be upset as little as possible, because it is always in the interests of the country afterwards for people to go back to their old trades if they can do so.

Then again the Government do not show to the country an example in economy in connection with municipalities. The municipalities are going on spending money largely. I believe they have been stopped from borrowing, but they are still spending a great deal of money on work which might very well be put off until after the war. You cannot go through two or three streets in London itself but you find some of them being pulled up. I should have thought that a year or two's delay would not have made much difference. Such work might well have been postponed, and the expenditure saved. This is going to be a very severe struggle; it will strain our financial resources to the fullest extent, and if the Government do not realise now the necessity for dealing with the financial situation and insisting upon economy in the country I am afraid that we might easily end in financial disaster. I am glad that this matter has been raised. All commercial people are beginning to see how necessary it is that we should conserve our financial resources, and I hope that the result of this debate will be to let the country see that at all events one House of Parliament takes an interest in the matter, and that His Majesty's Government are alive to the arguments which have been put forward and mean, as far as they can, to deal with the matter in the proper way.


My Lords, I am sure that the most ardent advocate of the privileges of the other House in respect of finance would not complain of the noble Viscount opposite for having raised this discussion to-day. I do not think it was ever suggested by those who are most jealous for the immemorial privilege of the Commons in these matters that this House should be debarred from the fullest expression of opinion or from giving the Government of the day advice of the kind with which we have been favoured to-night. Neither, I am sure, will anybody desire to dispute the hereditary right of the noble Viscount to initiate a discussion on financial questions.

The Motion deals with the effect upon our national finances of the increasing expenditure of the war, and it is, I think, realised now by everybody what is the immensity of the national strain imposed upon us by this colossal struggle. It is due in the main to two facts—in the first place, to our having instituted an Army on the Continental scale; and, in the second place, to our special function as world bankers. The first of those causes is entirely new—we have never before attempted to utilise the whole of our resources in the provision of an Army on the Continental scale; the second is on the contrary, an old one. For 200 years and more, when we have been engaged in foreign wars, it has been our custom to assist on the largest scale the Allies with whom we happened to be united by advances of money, and, of course, of credit; and it is interesting to remember that no country in the past has profited more by that provision than did Prussia herself.

As I was saying, the general recognition of the magnitude of this strain did not come on the whole country at once. At first it was only a select number of individuals who were able to realise it, just as the number of those who foresaw that the war was bound to be of long duration was not large. There was, I think, a general impression that if the war lasted long it would be exceedingly expensive and that financial difficulties might arise, but I am quite sure that the country as a whole did not face the matter until a comparatively recent date. Where we all have been agreed is that our one supreme national object from day to day must be the successful prosecution of the war.

The particular question which has been raised to-night can be regarded in several different aspects. In the first place we can look at it from the point of view of the necessary provision of our maximum contribution to the general effort of the Allies, and whether that contribution is made in the form of men in the ranks, or in the form of the supplying of the material of war, or in the form of advances of money or credit it equally means a vast expenditure of money, an expenditure which we are prepared to make to the utmost possible limit, but realising all the time that a limit must be placed beyond which, whatever form our contribution is to take, it is not possible to go. That has to be grasped. Then there is the other aspect on which much stress has been laid tonight—that of the promotion of national economy, domestic economy of all kinds, either by methods of persuasion, or, in the last resort—or, indeed, before the last resort—by methods of compulsion exercised through taxation. In the third place there is the question, which has also received due attention to-night, of the manner and extent to winch all forms of public waste can be avoided.

As far as imports are concerned, we are in habitants of a small and densely-populated country always importing a great deal more than we export. My noble friend behind me (Lord Devonport) gave us something of a discourse on various points of political economy and the foreign Exchanges, and I confess I could not help thinking that he might almost have paid your Lordships the compliment of crediting you with a little more general knowledge of the subject than he appeared to think that most of us possessed. But we listened to his discourse with interest. He explained—therefore it is certainly not necessary for me to explain, and in no case, I think, would it have been my duty to do so—the manner in which in normal times the balance between the value of our imports and our exports is maintained. It is important to note, because it has its distinct bearing upon all these questions of saving and avoiding waste, that the main bulk of our expenditure which puts our accounts so lamentably on the wrong side is made up of two items—in the first place, the importation of munitions of war, and, in the second place, the Loans to our Allies, and also, to a smaller extent, to the Oversea Dominions. You are not far out if you put down for a half-year of the war on the present scale a sum of about £350,000,000 as representing those two items, and it is obvious, therefore, that in this country our financial anxiety must hinge principally, as my noble friend behind me pointed out, on the question of Exchange. That is, of course, a matter of the greatest possible gravity, but at the same time I do not think that we should desire to exchange positions with Germany where this question of foreign Exchanges is relatively a small one. It will remain for them a relatively small one until their gates to the sea are once more open, and their commerce is once more able to pass backwards and forwards on the ocean, and when they find that they are once more in a position when it is necessary to pay for what they get instead of handing backwards and forwards fictitious money between the Government and the people of the country itself. It is of course undoubtedly true, as my noble friend Lord Devonport said, that it is absolutely vital to us to import, as far as possible, only what we absolutely require for the war, and at the same time to produce the maximum amount that we can for export.

I do not think that the various methods by which, in future, money may be raised, or ought to be raised, fall precisely within the terms of the noble Viscount's Motion, but I can assure Lord Devonport that the question of the rate of interest which would have to be paid for future Loans—not only for the next Loan, but for any that may have to follow it—has occupied the close attention of those members of His Majesty's Government who are specially concerned, although, of course, it would not be becoming in roe to attempt to say anything on the subject at this moment. At the same time I feel bound to protest against the manner in which Lord Devonport accused. The Government as a whole of blind confidence, complete ignorance, and the most utter carelessness in all these money matters.


I made no such implication. I should like the noble Marquess to be a little more specific if he chides me in that respect. I did not accuse the Government of ignorance. I never used the word.


I am very glad if the noble Lord did not accuse us of ignorance in this matter, although I am afraid he implied that we were excessively ignorant in several matters with which I shall have to deal in a moment. He undoubtedly accused us of blind confidence, because I took the opportunity of putting down those words after the noble Lord used them. I will come in a moment to such suggestions as the noble Lord made. But on this main question of our gigantic commitments I feel inclined to ask him two questions in turn, to which of course I do not for a moment expect him to give any answer. They are these. I have pointed out that the two main causes of our vast indebtedness are the supplying of munitions to the enormous Army that we have in the field and the advances that we make to our Allies. I should like to ask the noble Lord, without expecting any answer from him, whether he means that, if we have to economise and if ruin is staring us in the face in the manner he implied, he would set to work either to reduce the fighting forces of the Crown or to tell our Allies that, with great regret, we cannot go on financing them on the scale on which we have? Those are questions which I am sure the noble Lord will do well to consider when he speaks of the vast amount to which our national expenditure on the war bas now reached. Of particular economies, and so on, I will say a word later.

On this question of national economy in the domestic sense, so far as it is not entirely carried out in this country—and I am afraid we cannot pretend that it is—that is no doubt clue, to a great extent, to that want of complete realisation of the magnitude and meaning of the war of which I have already spoken. It is impossible not to feel that a general sense of the necessity has not yet permeated the whole of the country. There, again, I think we should have to admit that in Germany the conviction of that necessity has sunk far deeper. The German financial authorities have not hitherto dared to impose taxes on the people of the country. The Finance Minister stated in his speech last August that prices were so high that it was impossible to impose taxes, and at that time it was intended by him, as he stated, to postpone until the close of the war all attempts to institute a tax upon profits. I observe it is stated now that some attempt is to be made in Germany to place a tax upon profits. But even without taxation, these high prices and the shortage of many of the minor luxuries and some of the necessaries of life have no doubt brought home to the people in Germany the reality of the situation to an extent which is not true here. I noticed the other day a report made by a neutral friendly to Germany of the conditions of the part of the country through which he had travelled. After speaking of the manner in which the stores of nitre were replenished by producing nitrogen from the atmosphere, he went on to say that now jute was prepared from stinging nettles, cotton from a preparation of thistles, while the Government keeps people informed on weeds suitable for food or for industrial purposes. I do not at all quote those statements in a derisive spirit, quite the contrary; but it shows what the daily and necessary enforcement of economy in Germany is. At any rate, people in this country may express and ought to express their thankfulness that though in certain respects the cost of living may have increased, causing as it does a particular hardship on those who enjoy small fixed incomes, yet at the same time, apart from the fact that there is practically no unemployment in the country, there is a large proportion of considerably increased earnings, and speaking as a whole the children in this country are well clad and well fed.

My noble friend Lord Devonport spoke of the possibility of placing further taxes upon the importation of luxuries, and he asked us whether that was a point which has ever fallen within the consideration of His Majesty's Government. I can assure him that it has, The complete prohibition of some of the articles in the list which my noble friend read out would be, perhaps, scarcely practicable. It is, of course, open to my noble friend to think that the efforts which were made by the Chancellor of the Exchequer in taxation of this kind were not adequate. But I must place before him two considerations which I think he will agree have at any rate a bearing on the subject. In the first place, the taxation of some of these articles would involve changes in, or additions to, the Customs Department which would cost more than the value of the amount collected. As he knows very well, in imposing a tax the cost of collection is one of the first points which come under necessary consideration. In the second place, he must remember that one or two of the items he mentioned are practically all imported from those who are our Allies in the field. It is open to him, again, to say that that need make no difference; but, as a matter of fact, to pick out for the purposes of taxation a commodity which is perhaps solely produced by a friendly Power which is suffering, like ourselves, from the serious financial situation produced by the war is not quite so easy as it might appear to my noble friend.

Then I come to the question of savings on the Public Services and the prevention of waste, and on this very important side of the question a great number of instances were given and special criticisms made, with the whole of which the House, I am sure, would not expect me to deal. So far as the points connected with the Navy are concerned my noble friend the Duke of Devonshire will, in the course of the debate, say something upon them; and on the specific details regarding the War Office my noble friend the Paymaster-General will no doubt be prepared to reply. But the Army has formed the basis for such a large part of the criticism that has been made that it probably will be necessary for me to allude to one or two particular points. The noble Viscount opposite (Lord Peel) admitted, in the early part o f his speech, that it was not possible to suppose that at the beginning of the war we could expand our military system without some degree of unavoidable waste. There, again, the Germans possessed an important advantage over us. With them expansion from a peace footing to a war footing of their enormous force was, if not a normal, at any rate a completely foreseen occurrence. The House will remember that in the case of the Navy we were to a large extent equally fortunate. The cost at the time of placing the Navy on a war footing was not large; the cost of the mobilisation of the Navy is a comparatively small matter. It is true, of course, that as the war has proceeded vast additions of all kinds of craft not ordinarily used for purposes of war have had to be made for naval purposes, and that has added gigantically to the cost of the Navy. But even there the process has been an easier and a simpler one than in the case of the Army, as is proved, I think, by this having become the subject of so very much less criticism than Army expenditure. The Germans also possessed the advantage of dealing with a domestically docile and over-drilled nation, which clearly in such a case is no small advantage. When the phrase "increasing cost of the war" is used, I take it that it will be admitted that the increasing cost is clue to the increasing size of the forces engaged. It is not, I suppose, contended by our critics that there is increasing cost in the sense of higher payments for the same article—that is to say, for the same number of men as were paid in the early days of the war. I think we are entitled to regard the increase of cost, concerning which the noble Viscount gave quite accurate figures, as dependent solely on the infinitely larger scale on which the war is being waged.


I did suggest that the cost was increased, not merely through expansion, but because of the cost of the individual soldier. According to the Prime Minister that cost had gone up from £100 to £300 a year. Therefore there had been that increased cost of the individual.


I quite see the noble Viscount's point, but the £100 was a peace time estimate. Does he suggest that the individual soldier costs more now than he did this time last year?


I have no figures as to that.


Exactly; so I do not think the noble Viscount and I are really very far apart in our view of this matter. He also quite fairly pointed out that from the early days of the war we have had to learn, as indeed all countries have had to learn, some exceedingly costly lessons. He mentioned some instances. There was the provision, for instance, of heavy artillery which was presumed by all until this war broke out to be used, generally speaking, for what are called siege purposes, but which now forms a large and important part of the equipment of an army in the field. There was also the enormous increase in the number of machine-guns, due to the recognition of their increased utility. Then there was the sudden and perhaps somewhat exaggerated recognition of the value of high-explosive ammunition as compared with that which had been the mainstay of our Army before. All those were expensive lessons which we had to learn. The noble Viscount opposite, Lord Midleton, used to complain that the artillery ought to have been kept stronger, but he, I am sure, would be now the first to admit that even if there had been a few more batteries of 18-pounders we should not have been spared much of the vast expenditure to which we have been put in artillery and ammunition. And, of course, if we look back at the former debates which we used to have on subjects of national defence— and we have had not a few in this House during these last years—it never occurred to anybody in the course of those debates to ask such a question as this, "How many more men than 1,000,000 is the country likely to be justified in keeping in the field at once for a permanency, bearing in mind the financial aspect of the case and the necessity of turning a large part of the population to the manufacture of munitions?"

One criticism might, I think, naturally be made. It has probably always been a defect of our War Office to avoid such a collection of war material of certain kinds as would have facilitated expansion in the numbers of the Army when the day of need came. If, for instance, we had had originally a considerably larger store of rifles, the growth of the Army would undoubtedly have been facilitated. But I take it that the War Office—I am not speaking of it now under any particular Minister—has always taken the view that with a small Army such as ours it was supremely important always to have the newest and the best weapons of every kind, and therefore there was almost always a new rifle—to take rifles as an instance—on the stocks in process of invention; and apart from the natural desire of an Office to keep its Estimates low for such a purpose as that, there was an unwillingness to invest largely in a particular weapon which it was presumed might become obsolete by the appearance of a better. That is a criticism which I dare say may have occurred to more than one of your Lordships. It is also true—and there I think the noble Viscount was fair in what he stated—that the incredible expansion of the Army necessarily produced a certain proportion of hurried contracts not made on the best terms which care and delay and the possibility of inviting more competition might have brought about. The machine was running at extra high speed, and all fair-minded people, I think, will agree that it is net astonishing that it got heated to a certain extent.

When we come to consider the degree of attention which has been publicly paid to all these matters, I think the Government are entitled to inquire how it is that it is only now, in the middle of November, in the second year of the war, that these questions have been raised here. There was a certain amount of questioning and comment in another place. In November of last year, on some Supplementary Estimates, and also, I think, upon a Consolidated Fund Bill, a number of questions were raised in the course of debate by various members of the House of Commons. A number of questions were asked about the manner in which contracts were being given out. Comments were made that more civilian assistance of the kind which has been so generally pressed on us to-night ought to be called in to the Departments, and all manner of specific questions with regard to the supply of huts and galvanised roofing for them and the contracts with which local bodies were concerned were asked by hon. Members in another place. And later on, quite early in this year, at the beginning of February, the question of the cost of internment camps and also the whole question of hutting was gone into at considerable length, and a number of suggestions were made for the encouragement of local assistance by means of local committees and local knowledge in dealing with these contract matters. Then very soon after that came the case when the employment of Mr. Meyer—who, by the way, was a business man of the first ability, as I understand, in his knowledge of the timber trade—and the manner in which he was entrusted with making the purchases of timber was discussed at great length in the House of Commons. And there were various other questions. I remember there was one about contracts for horse-shoes, and another, I think, about contracts for boots, which raised a good deal of discussion. Therefore His Majesty's Government have not been altogether without the benefit of a good deal of criticism, so far as I know, upon every one of the points which have been brought forward in debate to-night. I believe that as a matter of fact the noble Viscount opposite at that time was otherwise engaged in commanding a force in the field, but I felt some little surprise as to how it was that this is positively the first debate we have had on these subjects in this House after so considerable a lapse of time as has passed since they were first mentioned.

Then we all remember that last July we had the Motion of the noble Viscount on the Front Bench opposite (Lord Midleton), and the question of appointing a Committee was discussed in both Houses. I am sure the noble Viscount will remember, after taking as much credit as he pleases for having initiated that discussion, that in the course of that debate my noble friend Lord Lansdowne informed him that we were proposing to introduce more outside assistance to improve the machinery and to introduce further outside assistance into some of the Departments; and two days later, in reply to a question from Lord St. Davids, I gave him a piece of similar information.

We have been accused of paying excessive attention to Parliamentary pressure in respect of matters where we ought to have been firmer in cutting down expenditure. That is a matter which deserves a certain amount of examination. I do not think it is possible, even in these times of war, entirely to ignore the Parliamentary system of government under which we still live. Nobody can deny that a dictatorship, altogether irresponsible, has certain advantages, possibly some at all times but undoubtedly a great many in the conduct of a war; but this is not the time to attempt to criticise the proposals which have been made from some quarters for turning the War Council into something like a dictatorship which would have far-reaching and unexpected consequences, on which it is not necessary to dilate at this moment. When proposals are brought before Parliament, and, for reasons given, there appears to be a general sense in the House that the proposals of the Government involve unfairness or hardship to individuals, I think it cannot be maintained as an axiom that in all those cases the Government are bound to adhere to their original proposals.

Take the instructive case which has been mentioned to-day of separation allowances, instructive because of their large amount and the enormous cost to which the country is put. Before the war separation allowances stood at about 10s. for a whole family, but there was a strong general pressure by which in the autumn of last year the amount was raised to an average of about 13s. and not very long afterwards to 14s. Then the question was brought before Parliament that a Select Committee should be appointed to consider the question of pensions to wounded, widows, and so on, and a discussion took place, as a sequel to which, in response to pressure from every quarter of the House, separation allowances were included in the reference to that Committee. The result of that reference was a further rise to the present amount which your Lordships know of, and which my noble friend regarded as altogether excessive. The argument which is used—and whether you like it or not, it is one which probably appeals with overpowering force to the great majority of the people in the country—is that when a man is risking his life for the country you must sec at any rate that he is free from care about his wife and children. Considerations which those who dislike them describe as sentimental, and those who approve of them describe as human, are brought to bear with the result that we know of That is an instance, I venture to think, in which no Government—even if all those who are most forward to criticise our expenditure were the leading members of it—would find it possible to offer resistance. I think it is probable that in the first instance the amount was somewhat too low, and that afterwards it reached a figure which some may not unreasonably think is too high. But I could not help noticing—and I am sure noble Lords on the Front Bench opposite will not accuse me of desiring to make anything like an ancient Party point in respect of it—on glancing through the arguments that were used by those who desired this increased expenditure, not specially in respect of separation allowances but of many others, that the argument perpetually used was, "Oh, in the Transvaal War you did not mind paying this, that, or the other amount, particularly in the later stages of that war, for those who volunteered to go out and fight for their country"; and I can understand that any critic may be disposed to point out that it is the first step which counts in these matters, and that the creation of any kind of precedent, whether it be in a separation allowance or anything else, is one of which at a subsequent time it is exceedingly difficult to get rid.

One of the principal points made by those who have criticised us is the presumed absence of all Treasury control as regards the War Office, and it is desirable to state what the precise position is on this matter. It is true, of course, that in the sense in which the expenditure of a Department is subject to Treasury control in ordinary times the War Office has not been subject to it. It has not been obliged before incurring any head of expenditure to get Treasury leave for incurring it. It was found to be altogether impossible to maintain that control in cases in which serious delay, or indeed, any delay of importance, would be caused by insisting on it. In such cases as those the Finance Member of the Army Council has been obliged all through to issue a very strict personal certificate of the expenditure which he has sanctioned. The Treasury also get a weekly statement of the whole of the current Army expenditure and of all the foreign purchases and commitments. I can quite understand that to some members of this House and to others it may appear that such control is not sufficient. The system under which Treasury control of Admiralty expenditure has been carried on is somewhat different, and may, perhaps, be held to give a more precise degree of control than that which has existed in the case of the War Office.

On the general point of control and inspection a Government Committee has lately been sitting and inquiring into all the various aspects of the financial situation, including this particular question of control, and they are of opinion that some system ought to be devised ensuring closer examination of all contracts, not merely at the War Office but at all the contracting offices. They hold that the scale of Army rations ought to be reviewed, and, if necessary, revised, and that more might be done in the way of sending back promptly to civil employment soldiers who are disabled either permanently or for a long period. A great deal has been done in the War Office, as my noble friend Lord Newton will explain, in many of these directions. The noble Viscount mentioned the question of billeting, on which the new arrangements ought to effect a considerable saving. The revised billeting scale ought, I think, to save from £1,750,000 to £2,500,000, according to the number of men that it is found necessary or desirable to billet. I understand that the savings which are proposed by the Army Council in regard to Army rations ought to produce a saving of something like £5,500,000 a year. There are a great number of other heads which my noble friend will enumerate to the House under which economies are being made. The noble Viscount mentioned also the economy effected in connection with the boarding out of horses.

I desire to say a word upon the question of the utilisation of the reserve of ability which exists in the country. I fell rather into the bad books of my noble friend Lord Devonport owing to something I had said on a previous occasion—I do not exactly remember what—with regard to the introduction of business men into these affairs. I hope I should be the last to say anything to depreciate the employment of business ability, and I am certain my colleagues would be equally unwilling to do so. So far as possible, it has been their object to obtain the advice of the best qualified business men for a particular object. But I think one is entitled to protest against what I may call the cant use of the term "business man" when employed as implying a person who is able to supervise or conduct any kind of affairs in which the expenditure of money is concerned. I do not think that it can be maintained that commercial success always involves organising ability or the power of general supervision of a number of subjects. The experience of business men is limited just as that of official men is also limited by the particular groove in which their activities have through life been conducted. Therefore while I yield to none in the desire to utilise all ability of that kind which is willing to place itself at the service of the country, I think it is not unreasonable to point out that that kind of capacity, too, has its limitations as well as the official variety of which my noble friend behind me (Lord Devonport) spoke so hardly.

I think it is not desirable that I should attempt to touch on any of the other numerous points that were raised in the course of the various speeches. I will therefore simply conclude by expressing the conviction that it is absolutely necessary for the whole course of the war that sound international finance and domestic economy should go hand in hand. If that rule is persevered with, I believe that we shall find when the war closes that we are still standing on a firm rock of commercial and financial stability, while our enemies are floundering deeply in the swamp into which their feet arc already beginning to subside.


I move the adjournment of the debate until tomorrow.

Moved accordingly, and, on Question, the further debate adjourned till Tomorrow, and to be taken first.

House adjourned during pleasure.

House resumed.