CONTROL OF WAR EXPENDITURE.

HL Deb 11 November 1915 vol 20 cc282-334

Debate on the Motion of Viscount Peel, 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," resumed (according to Order).

VISCOUNT MIDLETON

My Lords, although the rules of debate in your Lordships' House arc very wide, I shall not, I feel sure, be justified in entering upon the very interesting statement concerning the War Committee which the noble Marquess has just made to us. But I may be, perhaps, allowed to observe that I think the country will learn with some surprise that, although the debates of your Lordships' House have played so large a part in the recent past in regard to affairs connected with the war, not a single one of the members of the Cabinet who sit in your Lordships' House has been included in the composition of the Committee by whom the war is to he conducted; and personally I express my great regret that this should be so.

The debate on which we are now engaged has spread over very wide ground. I think that I shall be best consulting both the time and the wishes of the House if I endeavour to keep as closely as possible to the main point before us, which is the reduction of naval and military expenditure. The noble Viscount (Lord Peel) must feel some satisfaction, I am sure, at the interest which his Motion has excited, but I do not think he can have been well satisfied with the speech with which the noble Marquess the Leader of the House closed the debate last night; the noble Marquess seemed more inclined to defend existing abuses than to dwell on possible amendment. The Government have shown in earlier debates this week that they fully recognise the intense anxiety of the public with regard to affairs in the Near East; but I do not think, from the speech of Lord Crewe last night, that they can be said fully to recognise the intense anxiety of the public as regards this question of national expenditure. And I do not see how they will do so until they realise not only, as they now appear to do, that the problem which they have to face is quite an exceptional one, but also, which they do not appear to realise, that it can only be dealt with by exceptional organisation.

Although I propose to speak quite frankly about what seem to me to be the salient points that have led to exaggerated expenditure, I have not the least desire to reflect, or to be supposed to reflect, in any way on the officials of the War Office or the Admiralty. Speaking of the War Office, of which I know most, I think that the raising, the training, the feeding, and the supply of this enormous Army reflect extreme credit on the whole of the officers and officials employed in that Department. One or two rather painful attacks upon them were made some months ago, which were not repudiated altogether by the Government but which have never been substantiated I think that whether you look to the department of the Adjutant-General, General Sclater; or to that of the Quartermaster-General, Sir John Cowans; or to the whole of the civil department under Sir Reginald Brade, the country owes them an enormous debt of gratitude for what they have achieved.

But, my Lords, individuals are not going to win this war. The war can only be won by organisation; and the organisation, as Lord Peel pointed out last night, which is sufficient to control an expenditure of £30,000,000, cannot by any process be expanded so as to control £750,000,000. With regard to the non-appreciation of organisation, I would venture in the first place to allude specifically to the position of Lord Kitchener. I am not going to take up time by stating the entire confidence which is universally felt in this House and by the public and our Allies in Lord Kitchener, especially in the mission which he has now undertaken. What I object to, and what I venture in this House to challenge, is the system by which Lord Kitchener is laden with every kind of office and every kind of work which no ten men could perform between them. Some years ago Lord Kitchener was requested by the then Government to take up the command of the Mediterranean at Malta. He was to organise the Seventh Division, to inspect Gibraltar, Cyprus and Egypt; he was to inspect East Africa, West Africa, and South Africa; he was, I believe, to inspect Australia; and in order to make the position such as was proper for his qualifications and military experience, Lord Kitchener was offered a seat on the Defence Committee in London, where he was to inspire a system of defence, and he was also to sit on the Selection Board every fortnight in Whitehall and know the career of every officer in the Army. Lord Kitchener, with great wisdom, declined to undertake such a conglomeration of duties, to which he well knew no one man could do credit.

But what is the position now? Before the war broke out there was a Secretary of State, an Inspection-General of the Forces, a Chief of the General Staff, and there has only recently been, a few years before, a Commander-in-Chief. Lord Kitchener has all the unexampled work of the Secretary of State; there is now no Inspection General, and in these days when the inspection of the new troops is one of the most important of functions, Lord Kitchener has attempted from time to time to give what is really a great inspiration to these troops by his presence. Apart from that, when mobilisation occurred and the troops in Great Britain grew gradully to over 2,000,000 he became practically commander-in-Chief in Great Britain. The Chief of the General Staff died early in the war and for some time there was no chief of the General Staff' and when your Lordships consider what the Chief of the General Staff is in the German Army and how completely outside the immediate military hierarchy of the War Office he is, and what are the immense duties which fall upon him, can any one suppose that this is a light task—he was practically performing the work of the Chief of the General Staff—to place on the overladen shoulders of Lord Kitchener? Again, against protest after protest, the whole work of ordering munitions—in itself a work far larger in volume and amount than probably any individual in Great Britain has ever undertaken before at one time—was put upon Lord Kitchener; and beyond that, when we raised in the month of July the question of civil finance and retrenchment I understand that it was decided that the finance of the War Office should be dealt with by a Committee within that Department, and Lord Kitchener was forced into the position of chairman of that Committee. And, as everybody knows, conferences with the French authorities have taken him repeatedly to France; and now he is charged with a mission in the Near East. Am I going beyond the truth in urging that no human being could accomplish all these objects at the same time without having to neglect some important matters? If, by the genius of one man, an absolute collapse has been avoided on the military side and such wonderful work has been done, is it not obvious that, while the Germans are getting a sovereign's worth for every 15s., I am not far out when I say that we are spending £1 and are only getting between 10s. and 15s. value for it?

I sympathise a good deal with what was said by the noble Marquess last night about the cant of talking of bringing in business men who had not been connected with the particular business, and assuming that they would have some heaven-born inspiration. But what I do say is this. There are in this country, whether it be for such military work as Chief of the General Staff or for civilian work in connection with the arsenals, with finance, or with the commissariat, men of the highest experience who are only not in the War Office because they have been promoted to higher positions elsewhere, and who might have been recalled to inaugurate a much wider system with the utmost advantage to the public service. I commend to the Government that consideration, as they have deprived themselves of the whole of this large source of reserve during the course of the past fifteen months.

The Prime Minister spoke very strongly on the question of retrenchment a few days ago. He said— This great war has laid upon us as individuals, as a class, as a community, as a Government, a duty, a burden, which makes it necessary for us to be prepared to make far greater sacrifices than we have hitherto done for retrenchment and economy. If such a remark had been made by Mr. Gladstone it would have followed, I think, that every appointment would have been carefully scrutinised, and every shilling of additional expenditure would have been overhauled by the Treasury. Lord Peel said that in the mouth of Mr.Asquith such a statement became something like a pious opinion. It is impossible for Mr. Asquith to rely on the Treasury to carry out this duty, because over large amounts of this money the Treasury has abandoned all control. I believe I am right is saying that by far the greater part of the hundreds of millions which are being spent are registered in the Treasury but are not in any way criticised or overhauled by them.

What I object to is the extraordinary topsy-turvydom of our position at this moment as regards finance. In ordinary times the public clamour for experditure, the House of Commons criticises it and the Chancellor of the Exchequer either agrees to it or grants it to the smallest extent that he thinks consistent with due efficiency. Now it is the other way about. The public are clamouring for retrenchment, but the House of Commons has abdicated its functions and left to your Lordships' House the pressing of this ever-growing need. I hold in my hand half-a-dozen of the questions the were put in the House of Commons last week on one night. Every one of these questions suggests fresh expenditure. The first suggests that everybody at the Front who digs should obtain. 3s. a day like the Labour Battalions; next, that the parents of a soldier should not have a worse pension than a woman wholly dependent on a, soldier; next, that the Parliamentary Recruiting Committees under Lord Derby should be wholly financed by the State and receive money on account of their expenses—and I may mention that I read with astonishment this morning that Members of Parliament who are in receipt of a public, salary are receiving their expenses in some, cases when they go to speak at recruiting meetings; next, that the senior captains in the Army should be more quickly promoted, and that further separation allowances should be given to wives of officers. I do not think that members of the House of Commons quite realise that every sovereign which they force the Government to spend beyond what is absolutely necessary on Army service is a subsidy to Germany. It is really an iniquity to press on the Government further expenditure. The tendency, seeing that the Government have been most liberal, should be the other way.

Lord Peel gave instances last night of economies which have been brought about by pressure from outside. He mentioned the reduction in the billeting allowance and in the allowance in respect of horses. While the allowance for looking after sick horses stood at 35s.—it has now been reduced to 24s.—two gentlemen to my knowledge were making for many months £600 a week out of the Government for this service, which works out at the rate of over £30,000 a year. Those things have been going on for fifteen months, and it is only by the exertions of the new Financial Secretary to the War Office that a stop has now been put to them. I would mention one other case—the chartering of ships, on which millions have been spent. My noble friend Lord Inchcape, who is not at the moment in the House, could tell your Lordships that until the other day rates which must be now pronounced exaggerated because lower rates have been accepted by agreement, were paid, and had an effect on the Exchequer which some of the reforms which the noble Marquess mentioned last night would hardly reach to. Therefore I feel that we have a right to ask that the Government should show us what they are prepared to do themselves and not wait for what we can press upon them in our ineffective way from outside.

Allusion has been made—I will only touch upon it by way of illustration—to the manner in which the Government, which really means the Chancellor of the Exchequer, has dealt with the efforts of the Retrenchment Committee. Lord Peel mentioned that the postal reforms which were unanimously pressed and which would have brought in £8,000,000 a year have been reduced by a stroke of the pen to £2,000,000. He mentioned what he regarded as a great scandal—namely, that. Land Valuation officials who were not holding permanent posts had, since they had been discharged from work 97 per cent of which was admitted by Mr. Lloyd George to have been already completed—that these discharged officials were being offered other posts in the public service. The Retrenchment Committee recommended to the Government an economy of £1,500,000 a year by the abolition of the new work of the Road Board. That was accepted, and therefore this £1,500,000 must be added to the £2,000,000 of which I have spoken. But the Road Board had £3,000,000 in hand, and its contracts were very small compared with that figure; but this £3,000,000 has been left there although the country will shortly be in great need of the money. We urged that no new public appointments should be made at this moment except with the consent of the Treasury, that we should not have planted upon us an army of men filling posts which might be dispensed with, and which by an examination in some Departments we found could be dispensed with. But that was refused us. If the Chancellor of the Exchequer deals in this spirit with a subject which he understands and which he can control, what security are we likely to get from any control which he will exercise over Departments to which he does not belong, or in respect of business of which he has not the same knowledge and the same power of control?

The Prime Minister mentioned last night that seven Cabinet Ministers had been in consultation on this subject. I was not, and I do not think that those who look into the question will have been, very much impressed with the idea of this small Kitchener's Army of Ministers of the highest responsibility called together haphazard to adjudicate on financial matters, when of all their high responsibilities financial reform will be the last. I would infinitely prefer the plan, suggested by Lord Peel, of appointing two or three men who should give their whole time and attention and be armed with the necessary powers to deal with this subject.

I should like briefly, and without arguing them, to mention a few of the subjects which were left out last night in the Prime Minister's statement of what was required to be done, and what this Committee had already decided to deal with. In the first place, he made no allusion whatever to munitions. The growth of the Munitions Department. I assure the House, requires the most careful overhauling and the most careful control. I am as desirous as any member of the House that munitions without stint should be provided for the troops; but the idea of this Department—which in five months has, I believe, in salaries alone attained an enviable place in the front rank of our Departments; which is giving orders that, if the war goes on for a short time longer, will make the old National Debt itself seem a comparatively light imposition—the idea of this Department, uncontrolled by the Treasury, demands the urgent attention of the Government.

Then there is the question of the provision of men for the Munitions Department. I want to trouble your Lordships with two instances. This Office is at present in a state of chaos. I have had some correspondence with it. I had before me in the month of August the case of a munition worker who had served at Camel Laird's, Brown's, Vickers's, and Armstrong's. He was earning in October of last year from £3 to £4 a week. He joined the Colours and was sent out to the Front in the Army Service Corps. He became ill in the trenches, and was sent, home. He was judged fit for home service, but not for foreign service He asked whether, the demand being so great for munitions workers, he might join in that work. I have here twelve letters which have passed between May 5 and November 4, between this munition worker and the Munitions Department; and between them and his captain, or his colonel, the matter is still briskly proceeding. It is not that I have not attempted to get a hearing for this case, for I handed the letters in August to a member of the Government who is a member of the Cabinet, and I believe he went personally to the Munitions Department about the matter. The last letter from them was dated November 4, and in it the Ministry of Munitions stated that "they were unable at that date to deal with applications received from individual soldiers released from the Colours for work on the production of munitions of war," but that "arrangements were being made whereby the cases of all skilled men serving with the Colours, who are in this country, will receive attention." This man has already, I believe, been put under arrest by his commanding officer for too great insistence on his rights in this matter.

There is the other side of the scale. A commanding officer told me three days ago that under the new system whereby a man who is engaged for the Infantry may be transferred to any other arm, and vice versa, 250 gunners, trained men, including a large proportion of gun-layers, most skilled men, were taken last May from a particular command and sent to a regiment of Infantry, and for six months they were trained as Infantrymen. During the interval Infantrymen from the same command were sent to the Artillery; and all these men, of course, lost their previous training in the arm from which they were taken. But in the last few weeks the Munitions Department came down and, very properly, took such men as they found fit out of this 250, and of them 100 were taken for munitions. The country had trained those 100 men first for six months as Artillerymen and then for six months as infantrymen. Yet every one of those men was as much needed last November as to-day in munition work. That is what I mean when I speak of lack of organisation, and that is why I venture to say that the figure which the Prime Minister gave us of £300 as the cost of a soldier for a year might by a little organisation be largely reduced.

Among other matters not mentioned by Mr. Asquith was the enormous expenditure on camps. I believe that £3,000,000 has been spent on camps this autumn. The camps are ample, with some small amount of billeting, for all the soldiers we have now; and I trust they are ample for four times as many as we shall have embodied in a year's time or when the war is over. There can be no object in further adding to buildings which must be useless when the war is over. Again, with regard to the movement of troops. Troops are moved from one command to another without the smallest idea of expenditure. I have myself seen a regiment which was moved within the last month from Aldershot to another camp, then back to Aldershot, and then from Aldershot to Ayr. All those moves cost a great deal of money, and they are accompanied in the case of camps, as Lord Peel said last night, by a good deal of waste. Surely we have enough to do with moving troops where there is a military necessity, such as sending them to the Continent or training them at rifle ranges, without incurring the expense of moves which do not appear to be necessary.

I had an experience, the other day of the way in which contracts are handled. I was asked to sell all my hay in Surrey and to send it to the troops in Norfolk. I ascertained that the railway station was full of trucks of hay going to Norfolk and that another railway station within two miles was also full of trucks of hay which had come from Yorkshire, and so railway charges were being incurred both ways. I was in Egypt the other day and was informed there that the forage for the horses—of which we have an enormous number there, but it would not be right to mention the number— is being provided under contracts at £6,£8, and £10 a ton, yet the amount paid to the cultivator is £2 10s.; and that has been going on for months.

Another matter which the Prime Minister did not mention is the great question between the War Office and the Admiralty about the chartering of ships. Ships are chartered by the Admiralty; to extent they are filled and worked by the War Office; then comes in the Admiralty supervision. There was a debate earlier in the session in which it was pointed out that some ships had been kept for months together at a high charter doing nothing, when with a little management they could have been relieving others. I will give one instance which came under my personal knowledge the other day. Admirable as our hospital service has been in the Eastern Mediterranean, it would have been infinitely better had there been some machinery by which the wishes of the medical chiefs could have been attended to with regard to the movement of patients. But it actually occurred the other day, about the 2nd of October, that 800 invalided men were taken from hospital, some of them nine or ten miles from the seat of war, on a very hot day, and put on board a hospital ship, to be sent to England. Then it was found that there had been a misunderstanding with regard to the Admiralty's intentions as to the ship, and the whole 800 men were taken off again, put on ambulance wagons, and sent back to the hospital. That is the sort of thing which divided responsibility occasions, and it causes immense suffering. I feel that the whole question of chartered ships ought to be properly dealt with by some duly appointed authority. I am not going to trouble your Lordships further with these examples. I might multiply them a hundredfold from cases which have reached me and which require to be dealt with. Lord Cromer the other day spoke of the cost of War Office telegrams running into £123,000 in seven months, and I think he also spoke of motor cars, of which about one thousand were running about the country supposed to be on urgent Government work. I do not go into these smaller questions, but I do urge that if a strong central authority were appointed it could put its foot down on all unnecessary expenditure. I am convinced that you could reduce this £5,000,000 daily expenditure by at least £250,000 a day.

Our case is that there is opportunity for great reform. But the speech which the noble Marquess made last night did not seem to show that the Government had the least appreciation of the necessity for a fresh start. Lord Lansdowne painted the position of critics as being rather a pleasant one. I wonder if any member of the Government realises the hopelessness with which, after many efforts, we approach fresh discussion of these disorders. I could recount instances in which within the last few months there have been brought privately to the notice of the Government necessary reforms which would have saved millions of money and thousands of lives and which were adopted too late for either of those purposes. If the Government now turn a deaf ear to our pleadings concerning prodigious expenditure the whole of our conduct of the war may be paralysed. They have the certain prospect of another winter with a campaign so extended that not only this country but no country has ever before attempted. Men may be some difficulty; but, my Lords, our strongest point is our resources and our weakest is the administration of those resources. Criticisms are made only with the desire to assist the Government, but if the Government continue to face both ways, preaching economy and surrendering to extravagance, the responsibility must rest entirely on their shoulders if the result is that we find ourselves checked in the prosecution of the war on that which is our strongest point—namely, our financial reserve. It has been said with truth that there is no Opposition at present in this House, but if unfortunately in this particular there should be failure on the part of the Government, at all events we may urge that as independent members we have done all that lay in our power to avert calamity.

THE CIVIL LORD OF THE ADMIRALTY (THE DUKE OF DEVONSHIRE)

My Lords, my noble friend opposite has covered a large amount of ground, and if I shall be guilty of no discourtesy to him I do not intend to follow him into many of the subjects to which he referred, as I propose as far as possible to confine the observations that I have to address to your Lordships to matters in connection with the Office with which I have the honour of being connected. I should like to say that, coining to the Admiralty as I did on the formation of the Coalition Government and having had experience for eight or nine years of any official or departmental work, I was profoundly impressed by what I saw from the very moment I stepped into that Office, and that impression has been confirmed every day. Throughout the whole of that Office there is an extreme sense of the responsibility thrown upon the heads of every department. I would be the last person to deny that mistakes are committed; but every effort is made to profit by experience, and as far as I can see every possible effort is made not only to maintain the Service in an efficient and satisfactory condition, but also to it as economically as possible.

Many of your Lordships are aware that by the internal organisation of the Admiralty certain definite and specified duties are allotted to various members of that Board, and owing to the nature of the work to a very large extent the duties of those departments are self-contained. It is true that I stand in this House in order that I may be able to answer questions or convey information as to the work of the Admiralty as a whole, and I am quite sure that my colleagues at the Admiralty would be only too willing and anxious to help me to furnish information which any of your Lordships might desire to have. I can naturally speak with more intimate knowledge of those departments with which I am necessarily closely connected, but I have no hesitation whatever in saying that the impression which I first received when I went into that Office was that there was every desire to conduct these large and growing and increasing demands as economically as possible.

Only two questions of detail have been raised in the course of this debate with reference to the Admiralty. The first was one which was alluded to by my noble friend opposite and was also mentioned by Lord Joicey last night, and has reference to the Transport Department, A few days ago the Prime Minister gave details as to the work which the Transport Department has already accomplished, but certainly I should be the last person who would endeavour to defend himself behind the magnitude of the task or what has already been accomplished. Neither shall I defend myself by attempting to delegate responsibility to others. But it must be borne in mind that the Transport Department must to a very large extent depend upon the orders which it receives from naval and military officers on time spot, and that the operations, of the department must also to a very large extent depend upon the nature of the operations for which the Government as a whole are responsible. There is apparently a general idea that there has been a refusal on behalf of the Transport Department to avail itself of expert advice, but I shall be able to satisfy your Lordships that whatever blame there may be in connection with these transport questions we cannot be accused of refusing to avail ourselves of expert advice. A considerable number of experienced shipping clerks are new employed in the Transport Department, and the services of a considerable number of officers who have had previous experience of commercial shipping are made use of at the ports themselves.

But what is, perhaps, still more important is that since at any rate February last there have been sitting at the Admiralty an expert Committee who are fully informed of all that happens and whose advice is sought in all matters. I am at liberty to give the names of the Committee, and it will be recognised when I mention their names that we have gone on tried experience and capacity. The Committee consists of Mr. F. C. Gardiner, Mr. E. W. Glover, Mr. R. D. Holt, M.P. for Hexham, and Mr. T. Royden. I am quite prepared to admit that we are very far indeed from being satisfied as to many of the details of the Transport Department, and especially in connection with the Eastern Mediterranean. I am able to inform your Lordships that a Special Commission have been sent out to make inquiries and to investigate matters on the spot, and I have reason to believe that they are already at work. I can assure your Lordships that no efforts have been spared to endeavour to deal with many of the vexed questions with which we were confronted, especially in the Mediterranean. It was found that it was necessary to send out this Special Commission, which, as I say, is now at work, and which I hope will be able to place matters on a more satisfactory basis. The Commission consists of Rear-Admiral F. G. Eyre; a military officer whose name I do not yet know, but I can find it out if you so desire; and Mr. Thomas Royden, whose name I have already mentioned and who has served on the Advisory Committee at home; and I hope, whatever may be the opinion of your Lordships with regard to the appointment of business men, that at any rate we shall not be blamed if we have appointed a gentleman of the standing and capacity of Mr. Thomas Royden. Then Captain C. R. Jones, of the Welsh Fusiliers, is acting as secretary to the Commission.

In addition to the Advisory Committee sitting at the Admiralty and the Special Commission which is now dealing with the subject on the spot in the Mediterranean, I am able to tell your Lordships that arrangements were made some months ago between the Admiralty and the President of the Chamber of Shipping that a circular should be sent by the latter to all representative bodies of shipowners, asking them to call attention to any apparent wastage of tonnage, and to make any suggestions which might lead to a more economical use of the ships employed on Government service. The President of the Chamber of Shipping very kindly undertook to sift carefully all complaints and suggestions, and to pass on to the Transport Department any which he considered worthy of further consideration. Several months have passed, and so far about half-a-dozen such communications have been received, one of which contained a very useful proposal which has been adopted. I hope your Lordships will agree that the Transport Department has already accomplished a really remarkable service. The difficulties are considerable and increasing, and in many respects we are not free agents in as much as we have to deal with India, with the Colonies, and with our Allies, but I hope what I have been able to tell your Lordships will show that we, are fully alive to the drawbacks. We have taken practical steps to meet them, and I hope I may be allowed to invite members of your Lordships' House who have experience in these matters to make me the means of conveying to those responsible any specific cases which may come to their notice. I can assure your Lordships that the Transport Department will be most willing to consider any suggestions which may be received. I do not know that I am able to say anything further on the transport question, but I hope I have said enough to show that we are attempting to deal with this matter as far as we practically can.

A brief reference was made by my noble friend Lord Peel last night, when he brought this Motion to the attention of your Lordships, to financial control in the Admiralty. I do not know whether the few observations which he addressed to your Lordships on that point were intended seriously in the nature of a criticism, or whether he was merely making a passing reference to the subject. But it may go some way towards reassuring your Lordships if I state that at any rate as far as the Admiralty is concerned every effort is made to preserve as strict a financial control as the circumstances will permit. Of course, your Lordships will bear in mind that what I am about to say refers merely to the question of administration and not to policy. I am taking up the story, as it were, at the moment when the policy has been settled, and has to be converted into methods and means of administration.

I will first deal with the internal organisation at the Admiralty. Within a very few days of the outbreak of hostilities a procedure was adopted, and has been continued ever since, by which a weekly return of all expenditure is made to the Accountant-General of the Navy. The information thus collected is discussed at the weekly meeting of the Finance Committee. This Committee consists of the Financial Secretary, who acts as Chairman of the Committee, the additional Civil Lord, the Permanent Secretary, the Accountant-General, and the Assistant. Secretary for Finance. The Committee have before them all officers who have responsibility and of whom they wish to ask questions and also superintendents and others who may be responsible for expenditure in any particular matter. Your Lordships will have noticed that I used the word "weekly" meetings of the Finance Committee. Weekly meetings have been held since the outbreak of the war, but in addition a considerable number of other meetings have been held. I hope and believe that the procedure which was adopted at the outbreak of hostilities has, in the light of trial and experience, been of material value in dealing with questions of contracts and so forth.

With regard to Treasury, as distinguished from Departmental, control, at the beginning of the war the Treasury issued the following Minute on the procedure for dealing with expenditure requiring Treasury sanction— The Lords Commissioners of His Majesty's Treasury have had under consideration the question of the procedure to be adopted during the progress of the war in connection with proposals for emergency naval expenditure for which their sanction is required. The ordinary method. of official correspondence necessarily involves a certain amount of delay, particularly when—as Must frequently happen—further information or explanation is required in order to enable their Lordships to form a judgment upon such proposals, many of which are of a very urgent character. in order to avoid delay and at the same time to ensure that proper examination be made into the merits of each proposal, it appears desirable to arrange for their being brought before a Committee appointed for the purpose, which should meet when required, to consider proposals brought before them by the Admiralty representatives on the authority of the Board of Admiralty. They accordingly are pleased to appoint a Committee, to consist of their Financial Secretary (who will be Chairman), Sir J. Bradbury, K.C.B., Mr. G.L.Barstow, C.B., and Mr. V. W. Baddeley, C.B., Assistant Secretary for Finance Duties of the Admiralty, who has been nominated by the Board of Admiralty to represent them, and will he available to give such explanations and information as may be desired. A record will be kept of the recommendations of the Committee, and the decision of their Lordships will be communicated to the Admiralty in a letter authorising the expenditure decided upon. It may interest your Lordships to know that during the fifteen months of the war 177 sessions of this Committee have been held, and 2,370 separate proposals have been dealt with. Under this arrangement Treasury sanction can in urgent cases be obtained at an hour or two's notice, and can be acted upon forthwith.

There have been since this procedure was adopted two modifications which I should like to place before your Lordships. First, the Treasury have given authority to the Admiralty—this, I believe, applies equally to the War Office and the Ministry of Munitions—to make advances of capital in placing contracts for war material and supplies without obtaining prior Treasury sanction; and there has been a further development in that recommendations for ex gratia concessions to contractors in respect of war increases of cost in carrying out their contracts are now referred by the Treasury, for advice, to a Special Contracts Committee, presided over by a Director of the Bank of England, and composed of the representatives of the Treasury and the Dapartments concerned, instead of being adjudicated upon by the Standing Emergency Committee. This system of subjecting new and unauthorised expenditure to Treasury criticism week by week and almost day by day has worked with great smoothness and expedition, and to the satisfaction of both Departments. I can assure your Lordships that the Admiralty shrinks from no inquiry or investigation in the matter. I should like, in conclusion, to emphasise what I ventured to state to your Lordships at the beginning of my observations—namely, that apart from all machinery that may be adopted there is, I know, running throughout the Admiralty a most ardent wish, not only to provide all necessary requirements for the Fleet, but to do so as economically as possible. I have no hesitation in saying that a very great debt of gratitude is due to the permanent officials of the Admiralty for the energy which they have thrown into their work and for what they have already accomplished.

EARL ST. ALDWYN

My Lords, my sense of the incalculable value of the services which the Navy has performed for this country and our Allies during the war is so great that I should with the greatest reluctance otter to your Lordships any criticism of the work of the Admiralty, but I think that if there was a desire on the part of any noble Lord to offer such criticism the plain businesslike statement which the noble Duke has just set before us would be at any rate calculated to gain our confidence in the mode of administration which the Admiralty has adopted.

One thing only I would say. It is, perhaps, a small matter, but it relates to an announcement which the noble Duke made—and I was very glad to hear it—that a small Commission was about to proceed to the Eastern Mediterranean to enquire into matters connected with the transport service in that part of the world. I have some recollection of the difficulties and waste of the transport service in the South African War. I am afraid that some waste is inseparable from the transport service, because you always have differences of opinion between the military on the one side and the Admiralty on the other. Owing to these differences of opinion there may be detention of ships quite unnecessarily without its being by any means easy to fix the blame on any particular person. I would give the noble Duke an instance, which came under my notice the other day, with regard to the Eastern Mediterranean. I was told, on what I think to be fair authority, that there is a ship of large size now at Lemnos which is detained there at a cost of £1,000 a day and solely used for the military Headquarters of that place, when for one-tenth of that cost it would have been possible to erect shore huts to accommodate the Headquarters Staff and supply them with any necessary launches they might require for communication with the ships. I place that actual piece of information before the noble Duke, and trust that his Commission will see that this, at any rate, is not allowed to continue.

My noble friend Lord Peel has called your Lordships' attention to the effect on our national finances of the increased cost of the war. I was rather surprised to hear the noble Marquess opposite (Lord Crewe) find fault with us in this House because these questions had not been raised at an earlier time. The noble Marquess admitted that they had been brought forward in the House of Commons and, therefore, that the attention of the Government, had been called to them. I had hoped that this would have been sufficient, and that abuses which have been admitted throughout to exist would by this time have been remedied. It is no pleasant matter to call attention to such abuses as have been brought before your Lordships' House last night and to-night and to appear to have criticised the Government with regard to them, because everybody who feels it his duty to make such criticism fears that it may be turned into a sort of attack upon the Government and a difference of opinion with them in the prosecution of the war. I am sure there is not a single member of your Lordships' House who does not wish in every word he says in this matter to strengthen the hands of the Government and to enable them more successfully to prosecute the war. Therefore I rather deprecate the blame which the noble Marquess attempted to cast upon us for not having raised these matters before. I think it must be admitted that neither by the noble Marquess nor by the Prime Minister in the House of Commons last night have the matters that have been brought forward been completely or satisfactorily answered.

What is the reason for the greatly increased cost of the war from £2,700,000 a day in the spring to nearly £5,000,000 a day at the present time? The noble Marquess told us last night that one very important reason was our advances to our Allies and our expenditure on munitions. I think he told your Lordships that together those advances and that expenditure amounted to £350,000,000 in a half year, and for all we can tell that may increase. I am not quite satisfied that there has been sufficient control by His Majesty's Government in regard to orders for munitions in the United States. Some very unpleasant stories have reached me. Some of the earlier orders were apparently given to persons not then possessing factories of any kind themselves, orders for the supply of munitions to a considerable amount, those orders being accompanied by a payment on account of a quarter of the sum which would eventually have to be paid, although the works in which the munitions were to be made had not been erected. A more unbusinesslike proceeding I cannot imagine, and if any explanation of this fact, which has reached me from very good authority, can be given I shall be very glad to hear it. But no doubt in both of these matters the noble Marquess was quite right in saying that we are in a difficult position. These advances have to be made. These munitions have to be paid for by gold, or by securities, or by opening credits, or by loans. They cannot be paid for, as he very properly pointed out, as they are paid for in Germany—by an issue of paper. That is impossible in our case, and this great expenditure abroad is, I think, the most important difficulty in our present financial situation.

Lord Peel last night told your Lordships that the revenue for the year would not suffice to meet the total expenditure of the year by some £1,650,000,000, of which £1,050,000,000 had already been provided by Loans here and in America, leaving a balance of £600,000,000 to be provided at the close of the year by loans. That is a situation of the utmost gravity. Nobody can doubt it who considers the position for a moment, but it is not a situation that strikes me with alarm. I believe that whatever our requirements may be they will be met, though if we have to issue another great Loan or even more, no doubt methods may have to be adopted which have hitherto been strange in this country. I believe that the country will find the money, and that there is no reason whatever why we should, by faint-heartedness in these matters, give our enemies cause to rejoice. But I do say this, that the Government of the day is bound to exercise far more than has yet been exercised the means at its disposal for minimising the amount of the future Loans we may have to raise. They have not exercised, in my humble judgment, those means in any degree sufficiently at present.

First of all, have the Government raised enough taxation? I have protested as much as I could during the course of the last fifteen months at the delay in initiating taxation. Fresh taxation for the war ought to have been imposed almost as soon as the war began, instead of delaying it from August until November, and, when imposed, it ought to have been to a far greater amount than in last year's Budget. Taxation this year ought to have been imposed in April or May, instead of waiting until November for the Budget to be passed through the House of Commons. However large those increases of taxation this year have been, I venture to express my humble opinion that they have not been large enough, especially with regard to indirect taxation. You cannot carry through a great war of this kind without a large amount of indirect taxation on many articles. Let anybody look back to the mode in which money was raised during the Napoleonic wars. You cannot carry through a great war with this enormous expenditure if you adhere strictly to Free Trade theories. His Majesty's Government have found that out, and the Chancellor of the Exchequer has, quite rightly and properly, thrown overboard his Free Trade theories.

But the Chancellor of the Exchequer might as well have been hung for a sheep as a lamb. What was the use of proposing new taxes solely on such articles as motorcars, musical instruments, films, clocks, watches, and some other things, and then throwing overboard some of them almost as soon as he had produced them? Why, none of them will produce to the Revenue any sensible sum. None of them will seriously check that which, in the view of all competent authorities, requires to be checked now—the amount of unnecessary imports into this country. Last night Lord Devonport, who is well acquainted with the trade of the Port of London, went through a list of articles which in his opinion might have been not only taxed but might have been prohibited. I do not see the use of prohibiting articles; I should like to raise some revenue out of them. But there were two articles which he mentioned, silk and furs, amounting to a total, I think, of some £10,000,000, which certainly would bear taxation. There are other articles to an enormous amount imported into this country. Take oil, for example, on which there is not it penny of taxation at present, and which would perfectly well bear a small tax.

I do not wish to trouble your Lordships with any detailed observations on this matter because it is, of course, a question for the House of Commons rather than for this House. But I venture to say that in their proposals for increased taxation His Majesty's Government have not gone far enough with regard to the proportion which the taxpayers of to-day ought to bear of the cost of the war, and that is one reason why this enormous amount of borrowed money will have to be raised. Another reason is the increased expenditure apart from the matters of loans to our Allies and Colonies and the cost of munitions. Let me say, in passing, that I happen to be at the present moment chairman of the Treasury Commission on the issue of new capital, and I have been very glad to find that throughout the country there have been movements by companies and individuals, who have hitherto perhaps been engaged in some other manufacture altogether or to a comparatively small extent in the manufacture of munitions, to raise fresh capital for this purpose and thus to provide the munitions that are required in this country rather than importing them from abroad.

The noble Marquess told us of other legitimate reasons for the increased expenditure. He told us that of course the cost of the Army increased if you had more men. He told us that there were unexpected requirements for heavy artillery, for high-explosives, and for machine-guns. Undoubtedly. It was, of course, impossible to help that But I will venture to say that with regard to all these matters— legitimate as well as illegitimate expenditure—Treasury control is simply not possible in the sense in which it is ordinarily understood. I found that out in the South African War. You had practically to leave the Departments responsible for the Army and the Navy to manage their affairs as best they could, of course subject to the control of the Cabinet on questions of general policy. But Treasury control in the technical sense was not practicable then and would not be practicable now. Within the War Office I believe control would be perfectly possible in this country, but by no means so easy abroad.

I must say that I associate myself with what fell this evening from my noble friend Lord Midleton with regard to Lord Kitchener's position. Nobody has a higher opinion of the genius, the energy, and the ability of Lord Kitchener in organisation than I have. I, together with the late Lord Salisbury, had experience of that in the Sudan campaign, which was organised and carried through, I believe, more efficiently than any milltary expedition which this country ever had to do with. That was organised and carried through by Lord Cromer and Lord Kitchener. Therefore if one man could do the work I believe Lord Kitchener could do it perfectly well. But it was not possible for any one man at the commencement of this war to attend to all the matters which fell under the direction of the War Secretary, and the impossibility has been proved by the fact that His Majesty's Government have had to appoint a Ministry of Munitions to deal with part of that work which, as we know now, fell into sad arrear. More was thrown on Lord Kitchener than any one man could possibly do.

That mistakes—worse than mistakes—made in matters of contracts and in expenditure of various kinds in the early part of the war could not have been avoided altogether I quite agree. You had to adapt your organisation to an Army five times, or more than five times, as numerous as that for which your organisation had been intended, and it was impossible but that grave mistakes and grave waste should have occurred in the early stages of the war. I suppose the historian will find some one to blame for all that, but it seems part of the English character—I think it is a misfortune—that we never shall be ready at the commencement of a war, and we certainly were not ready at the commencement of this war for such a war as it has proved to be.

The war has now been going on for fifteen months, and it is only after fifteen months that the Government are able to tell us that they have appointed a Committee of the Cabinet to go into all these questions of possible economies. They have tackled three matters only—namely, the question of rations, the question of billeting, and the question of restoring unfit soldiers to civil employment, to which the noble Marquess alluded last night. But my noble friends Lord Midleton and Lord Peel placed before your Lordships half-a-dozen or more other matters on which there has admittedly been enormous waste. Is nothing going to be done with regard to them? And if anything is going to be done, when is it going to he done The noble Viscount spoke of the tendency to construct an unnecessary number of camps. What is the use of providing permanent camps for a very large number of men in this country? You can billet your forces throughout the winter as much as you like. He spoke of other matters of waste in various ways—the exceptional movements of troops, the use of motor-cars, official telegrams, and many matters of that kind—into which surely the War Department ought to have looked before now. What I think the country wants to know is why these things have not been tackled before.

I am afraid I can only attribute this delay to some want of determination and energy on the part of the Government, and primarily on the part of the Prime Minister. There is no more eloquent man in this country; there perhaps was never a more eloquent member of the House of Commons than the Prime Minister. His speeches are admirable; his sermons on economy have been quite delightful; but what is the example, so far as regards our people, that he and his Government have set? The noble Marquess, Lord Crewe, told us yesterday, and I think he is quite right, that the people here are not generally permeated with the sense of domestic economy. How can they be when, instead of the example and precept and action which the German Government take very good care to enforce upon their people—how can our people be permeated with a sense of domestic economy when they hear all these stories of waste, which are not denied, in the military services, when they see that though the Prime Minister and many of his colleagues preach admirable sermons to every one else on the subject of economy they do not put them into practice themselves? They make no proposals to Parliament, for fifteen months of the war which can be said to tend to economy at all, and when the Committee which was appointed with no little flourish of trumpets last summer to inquire into these matters made recommendations to them which, in the case of the Post Office, would bring in a revenue of some £7,000,000 or £8,000,000, the Chancellor of the Exchequer almost without fighting, cut that down to £2,000,000 in obedience to Parliamentary pressure of a most insignificant kind. It was astounding to see that such a recommendation should be thrown overboard mainly, I believe, because the picture post-card makers insisted upon the maintenance of their trade. Of all useless luxuries, is there anything so useless as picture post-cards?

The Prime Minister said the other day that we cannot go on discharging the burden that is falling upon us unless there is, "both on the part of the Government as well as on the part of individuals, the most strict and stringent rule of economy, the avoidance of unnecessary expenditure, and the curtailment of charges which under normal conditions we should think right and necessary"; and unless the Government" make, and are prepared to make, far greater sacrifices than hitherto in the direction of retrenchment and economy." That is what every member of the Government has been saying. But what have the Government themselves done? Have they diminished the staffs of their Departments? Have they ceased to take on new members of the Civil Service? Have they done anything whatever to practise the economy which they themselves are so ready to preach?

The other day—the very day, I think, On which the Prime Minister used these words in the House of Commons—a member of his own Party, Sir Arthur Markham, asked him whether he would give the House of Commons an opportunity of expressing its opinion on the payment of salaries to members of the House of Commons during the war. Did the Prime Minister even promise that he would give the House of Commons such an opportunity? He simply put it aside by saying that he did not think the House of Commons desired it. I wish he would try them. I do not believe that members of the House of Commons in the present circumstances would saddle the country with the payment of £250,000 a year for their salaries if the option were put to them of refusing it. It must be remembered that ten years ago no such salaries existed. The House of Commons and the country got on very well without them, and the fact should be borne in mind that they were imposed on the, Exchequer not by an Act passed by both Houses of Parliament but by a device by which your Lordships' House was prevented from expressing any opinion on the matter at all; yet your Lordships are taxpayers as well as the other individuals of the country. When we talk of tens mid hundreds of millions, the saving of £250,000 may seem nothing at all. But what I have said is just an example of the way in which the Prime Minister's practice fails when compared with his preaching. Unless this matter is really tackled and dealt with by the Government, unless there are drastic economies in the Civil Service and the expenditure of the Army at home is dealt with in a way which has never yet been attempted, I do not think that the issue of the war will be as successful as we all hope and intend that it shall be.

LORD SYDENHAM

My Lords, in a recent debate in your Lordships' House one very important question of principle was decided. It was, I think, agreed that free and frank discussion of the conduct of the war was in itself desirable, and that no better arena for such discussion could be found than in your Lordships' House. In any criticism of past mistakes I am sure that the only object, as the noble Earl has just said, is to strengthen the hands and perhaps to stiffen the backs of the Government in order to prevent a recurrence of such mistakes.

Speaking broadly, and putting aside for a moment such matters as the Dardanelles operations, the Antwerp Expedition, and many other important matters to which the noble and learned Earl (Lord Loreburn) referred on Monday last, I think the legitimate criticism that has been directed against the Government has been in regard to their delays in carrying out measures which seem to most people to be essential; and that criticism, perhaps; applies with special force to the question we are now discussing—namely, that of economy. But we ought all to remember the great difficulties with which the Government were faced in dealing with these questions. At no time in our long history did this country go to war at a worse juncture from the point of view of securing public and private economy than when the war began last year. Effective control by the Treasury had been sensibly and exceedingly weakened and this great Department of State had really been converted into a spending agency on a very large scale. It had undertaken huge schemes costing large sums of motley and based upon estimates which proved to be fallacious, and in this way it set a bad example to other Departments and lost control over them. Then it is fair to say that the House of Commons, as guardian of the public purse, had almost ceased to exist. Large and increasing sums were voted without discussion, and the activities of that House have been directed to increasing public burdens even at a time of public crisis like this, as Lord Midleton has said. At the same time the country was delusively prosperous. I say "delusively prosperous" because it rested on peace, and we now know that in 1912 certain proposals were made by the German Government which prove conclusively that war was then within measurable distance.

It followed from this prosperity that at one end of the scale there was far too much luxury, and at the other a gradual transference of responsibility from the individual to the State had gone far in the direction of undermining old-fashioned ideas of thrift. Such were the conditions when we were suddenly brought face to face with the greatest war on record. Nobody could then say what the war would cost, though everybody knew that the cost must be stupendous. Directly it became known that 3,000,000 men would be required, there were data on which rough, perhaps very rough, estimates could have been framed. The noble Viscount (Lord Midleton) quoted from the great speech of the Prime Minister on the 2nd of this month. Those, my Lords, were grave words, but they were uttered fifteen months after war had begun, and I cannot forget that only a few days before another member of the Government had painted the financial position in somewhat attractive colours. And I must point out that in the sacrificial category quoted by Lord Midleton from the speech to which the noble Earl has just referred, the Prime Minister put the Government last. Surely nothing is more certain than that, national economy can only be brought about by the Government alone. And it can only be brought about in three ways—by drastic and visible retrenchment in public and municipal finance; by taxation direct and indirect—and the noble Earl, speaking with his great authority, has told us that what has been done is not sufficient; and by prevention, as far as possible, of all waste in expenditure on the war itself.

Retrenchment was begun as the result of the motion made by my noble friend, Lord Midleton, but the retrenchment proposals, as we saw only too plainly and sadly in the debate on the Postal Rates Bill, broke down in another place and did not produce anything like the success we expected. Increased taxation we have had, but far too little; and there have been postponements which our financial position certainly cannot be held to justify. There was great waste in the South African War, as the noble Earl has said, and from that waste we might have learned something. But the South African War was a mere bagatelle from the point of view of waste compared with what has gone on in the last few months. In the chartering of ships, in rations, in billeting, in hutbuilding, in allowances, and in other matters, it is not too much to say that tens of millions have been squandered. More than that, this waste has done incalculable harm, because it has tended to create a false standard of living and has rendered private economies far more difficult to bring about just when extravagance ought to be put down. It has even operated, as Punch pointed out some time ago, to qualify the desire for peace in some quarters.

If one searches for the causes of the waste, as all philosophers must, I believe the lapse of effective Treasury control and the general financial laxity must be held to stand first. But apart from this the great spending Departments have undertaken work for which they were distinctly not qualified. The chartering of ships and their economical employment was beyond the capacity of any Department as it was constituted in peace time. If at the outset of war all the great Departments which were to control the expenditure of these vast sums had called to their assistance experts who could have helped them, who would have been ready and willing to help them, much of the expenditure we deplore might have been saved. The noble Duke has said that shipping questions are going to be looked into, and I am certain that economy in that respect can be obtained. But surely that ought to have been done a long time ago, at the very outset of the war. At the War Office everything seems to have been centralised, and wasteful expenditure of all kinds has occurred wholly through a want of guidance. The Reconstitution Committee of 1904 made an earnest effort to decentralise War Office finance. But all those efforts seem to have been swept aside, and the War Office took to giving out immense direct contracts for hutting even when they had experienced officers on the spot who could have advised. I am told that some contracts were made by the War Office on the basis of a five per cent addition, not to an estimate carefully scrutinised—a matter of business—but to the total cost incurred in building huts. I hope this is not true, because it would be putting a direct premium on exaggerated expenditure.

At the outset of the war the War Office set up what was entirely new machinery. That may have been necessary; probably it was. But I cannot help thinking that the County Associations which have done so much admirable work in so many directions might have been made more use of, might have been strengthened in personnel and more power put into their hands to enable them to do more than they did. They could have raised and equipped many more men than they were allowed to do; and their local knowledge would have been really invaluable with respect to the questions of billeting, hutting, and allowances, which of course depend largely on local conditions. As an instance of want of prevision of that kind, I may say that it was brought to my notice that sixteen Poor Law schools, mostly situated in military centres and capable of giving excellent accommodation to between 11,000 and 12,000 soldiers, might have been taken over by the War Office to save hutting or billeting costs. Of those sixteen schools only one has been taken over—as a hospital.

After nine months of war the Munitions Department began to be created, just four months after it had become perfectly clear that an enormous increase of machine-guns, of heavy guns, and of ammunition would be required, and that all our field guns must be provided at once with high-explosive shells. That Department is settling down to work after a period which may almost be described as one of chaos. It will soon be able to produce an immense quantity of warlike stores, which I am sure will make a deep impression on the progress of the war, especially this winter, in Flanders and France. But it cannot be an economical Department. In the first place its Head has not a record for economy. In the second place, the salaries and wages it is giving seem to be exorbitant. More than that, I understand that the great spending Departments order what they like from the Munitions Department. If that is so, it means that the expenditure will not fall on their budgets and one inducement to economy will be removed. On the other hand, the Munitions Department itself is placing orders to the extent of hundreds of millions literally, and is not in a position to make the spending Departments show cause—that is, explain whether the orders they give are based upon definite estimates of real requirements or on guesses inspired by the natural wish to have an enormous margin. From the point of economy, the difference between those two points of view must be very great indeed.

Instances of wasteful expenditure have been given by all the previous speakers, and such instances could be multiplied to a great extent. I suppose there is not one of your Lordships who could not bring forward some such instances. I will mention only two. They were recently brought to my notice, and they bear out what was said by the noble Viscount, Lord Peel. A messenger boy employed in one of the London offices at 11s. a week went to the Munitions Department where his salary was raised to £2 10s. 5d. There would be something delightful about the fivepence were the matter not so serious. I cannot tell whether a case like that is typical, but if it is and that increase of expenditure is to be largely multiplied the total sum involved is very great. Another instance. A battalion in this country received a number of recruits from Ireland. Of these, 200 had to be rejected and sent back, and some of them were over sixty years of ago. If this is typical—and I think it is—of so many other forms of expenditure, it means not only the loss to the country of the sums actually involved but the general demoralisation which is produced by this waste. It is quite impossible without inquiry to make any estimate in figures of the total waste that is going on, and I doubt whether inquiry would reveal all the facts. But we have had indications enough in this debate to show that the total aggregate of the waste which is going on and has gone on since the war began must amount to enormous figures.

I come back to my principal thesis—namely, that it is only by the drastic action of the Government itself in checking waste and in enforcing retrenchment that real public or private economy can be secured. I have reason to know that bankers feel very strongly that while they have done and are ready to do all in their power to help the Treasury, the Government has not played its part in enforcing economy and preventing public waste. The ex-Chancellor of the Exchequer was quite right in a sense when he spoke of "silver bullets," but if the silver instead of being turned into bullets which will help to kill the enemy is wasted on rations that have to be burned, or on huts that prove to be uninhabitable it will not help to end the war. All right-thinking people in this country feel that the measures of the Government have too often been tardily taken after debates in your Lordships' House and after protests in the Press, and have not come about by the initiative of the Government. The noble Viscount asks that more control shall be established over military and naval expenditure. Nothing that our splendid soldiers or sailors require for their success or for their comfort can ever be denied to them, but the kind of waste which has been referred to in this debate must be checked as soon as possible. It will not help us to victory, but will impair our financial endurance, on which at the end victory may depend.

The Retrenchment Committee which was set up might have worked wonders if only it had been given mandatory powers. Cannot a strong Commission, as Lord Midleton proposed, be set up, to exercise control over the major items of expenditure and to enforce retrenchment? Such a body working with the spending Departments could insist that demands were reasonable, that they were based on definite estimates and on a definite policy, and that they could be defended. It is the want of putting Departments on their defence which is the cause of the wasteful expenditure we deplore. The composition of such a body would, of course, be the most important matter of and it must contain men who know the working of the great public Departments. A Commission of four or five, if it had its headquarters at the Treasury, might have one Commissioner sitting in each of the three great spending Departments and presiding over small finance committees to watch over finance and bring independent authority to bear upon those Offices. Such a Commission would, I think, go a long way to produce the economy which we desire. As the noble Viscount said, it would, of course, report direct to Parliament in all cases in which its recommendations were not adopted.

I know quite well the objections that can be offered to such a scheme as that. In the first place, it might be said that it would create an Imperium in Imperio. But objections which are valid in peace time are invalid when a country is lighting for its life. Another objection might be that it is too late to take such a drastic step, and that we cannot redeem our past extravagances. But every million saved now will be so much to the good, not only for the prosecution of the war but for those very lean years that lie before us. The destruction of national capital, both in precious lives and in treasure, is proceeding at a terrible rate; and in proportion to what we waste now will our powers of recuperation be diminished when peace conies back. And so I end, as did the noble Viscount, in an earnest appeal to the Government, and, as he did, I couch it in terms of military metaphor. Let the Government, like our gallant officers in the attack, come straight out in front and lead the nation in this vital matter of retrenchment and in all others. I am certain the nation will follow.

THE PAYMASTER-GENERAL (LORD NEWTON)

My Lords, if I interpose at this period of the debate it is not for the purpose of making any reply to the three noble Lords opposite. Theirs were speeches which dealt chiefly with the general question of economy and with questions of high policy, to which I feel quite incapable of replying. I have no doubt that an adequate reply will be forthcoming presently from one of my noble friends behind me. I rise for the much more modest purpose of answering, to the best of my ability, some of the questions which were put in the course of yesterday's debate, principally by my noble friend Lord Peel, who was generous enough to begin his speech by calling attention to real economies which had already been effected by the War Office. Probably the House recollects the particular forms which those economies took, but perhaps it will be as well if I remind your Lordships that they refer to the reduction in the billeting rates and to the savings in rations. In the former case the saving amounts, I am told, to something between £5,000 and £10,000 a day, and in the case of rations the economies amount to something like £15,000 a day; and reductions have also been effected with regard to horses, which were also alluded to by the noble Viscount opposite. I rather think that lard St. Aldwyn, in the course of his remarks, instanced these as the only directions in which national economy had been achieved, but I might, perhaps, remind him. as was pointed out by my noble friend the Leader of the House yesterday, that amongst other economies is the extremely important one caused by the new arrangement with the Allied Governments to co-ordinate purchases and to prevent buying against one another in the same markets. I might, if I had time, adduce other instances, but I prefer to pass at once to the suggestions, if I may call them so, which were made by my noble friend Lord Peel in the course of the debate yesterday.

The first suggestion which came from my noble friend was that the pay of young officers doing home duty should be cut because he considered that they were not doing the equivalent work of officers who were serving at the Front. Theoretically there is no doubt a good deal to be said for that view, but I do not know that it has ever been acted upon in practice. I doubt whether there is any precedent for such a course, although I may be told that the circumstances of the present moment are such that we need pay no attention to precedents. My noble friend also suggested that gentlemen occupying what he was pleased to call "semi-military posts" should also be reduced as regards their pay, because he considered that they had been awarded in most instances too high rank. The officers whom he has in mind, I assume, are chiefly majors and colonels. I am informed by the War Office that, they have done their best to reduce these ranks as much as possible and that in their opinion the rank which these men hold is only proportionate to the work they do. But if my noble friend chooses to bring forward any specific instance of an over-paid official of this kind I shall be happy to make inquiry.

My noble friend passed from that suggestion to a more important matter—namely, separation allowances; and he suggested the heroic course of reviewing mid reconsidering the whole question. Well, I do not envy the Minister upon whom this task might possibly devolve, more especially in view of the fact that the cost of everything tends to increase. With regard to this particular point Lord Devonport—whom I regret not to see in his place—made something of an attack upon me yesterday with regard to a statement which I made in this House some months ago. In reply to the noble Lord, in the month of July, I informed him that the cost of separation allowances had risen to £850,000, and, as we all know, at the present moment the cost of separation allowances and dependants' allowances has risen to considerably over £1,000,000. Lord Devonport rather charged me with having, though not intentionally, misled the House on this point. All I can say is that the figures which I gave were supplied to me by the War Office. I have every reason to suppose they were absolutely accurate, and I can see no inconsistency whatever between the figures I gave then and the fact that these allowances are costing the country more than £1,000,000 at the present moment. That increase is easily explained, not only by the fact that in this sum are included the allowances to dependants, but also by the actual increase in the Army which has taken place since that date. I believe it is the case that every 20,000 men added to the Army represents £7,000 on a weekly average which has to be paid in allowances. Once more I should like to take the opportunity of repudiating the charge that these enormous sums are due to the action of the War Office. These allowances were forced upon the War Office by the action of a Committee of the House of Commons, and the War Office were practically powerless in the matter. I would like to add this piece of supplementary information, that owing to the generosity of the British Government in other respects the pay of Civil Servants who have enlisted in the Army amounts at the present moment to the not inconsiderable figure of no less than £2,500,000 yearly.

I pass from the question of separation and other allowances to the expenditure upon recruiting. My noble friend was anxious to know what the total expenditure was under this head. I am unable to give him as close information as I should like, although I may say that, speaking for myself, I am always anxious to give such information as lies in my power. But at all events I can tell him that the Parliamentary Recruiting Committee have had, roughly speaking, more than £60,000 to dispose of, and upon advertising a sum of very nearly£100,000 has been spent, while in addition I am able to inform him that local authorities have received a grant of 2s. per man in respect of the local battalions which have been created in various parts of the country.

Another question which the noble Viscount put to me was with regard to the pay of men in so-called technical trades. He, and I rather think some other noble Lords, drew attention to the apparent inconsistency and extravagance of giving these men much higher pay than they had previously been earning in civil life. The fact is that the scales of pay in these cases were settled long before the war, after consultation with the Board of Trade and after approval by the Treasury; and I think it would be admitted by noble Lords who know very much more about these questions than I do that if no such arrangement had been arrived at beforehand probably these men would have obtained even higher remuneration than they are receiving at the present moment. It must be plain to anybody that under a compulsory and universal system these men, however skilled as mechanics they might be, would be paid at the rate of ordinary private soldiers, but under our procedure such a system is naturally impossible; and in view of the voluntary principle and of the condition of the labour market I do not think there is anything which we can fairly be astonished at in the present rates. But I may add that every effort is made to reduce the scale whenever opportunity arises, and I believe it is the case that there are very few men actually in this country at the present time who are being paid these high rates.

A very important question is that of the men who have been discharged after a very short period of service as permanently incapacitated or unlikely to become efficient soldiers. I am not aware of the exact number of these men, but I will take it upon myself to assure my noble friend that the number of men in this category amounts to a very formidable total. Part of such duties as I perform is in connection with Chelsea Hospital, and I must own that since my connection, short as it has been, with that institution I have been most disagreeably impressed with the wastage which has taken place with regard to this particular question. It is no exaggeration to say that instances have come to my notice—and presumably they have been fairly frequent—in which the country has had the advantage of the services of a man only for a few days. That man has then been discharged as permanently incapacitated, and has been saddled upon the taxpayer to the extent of 25s. a week for the rest of his life in addition to such children as may he dependent upon him. I confess that this seems to me a very serious and a very important question, and no doubt there was great confusion at the beginning of the war which has resulted in this melancholy state of things. At the same time it is impossible to overlook the fact that there must have been extreme carelessness on the part of the medical men who examined these soldiers, and it is really not a sufficient excuse to say that it was necessary to find a lot of men at once and that they must he provided at all costs. Nothing, it appears to me, can be more foolish than to recruit men who turn out to be little better than useless and expensive encumbrances, and it seems to me that searching investigation ought to be made into this practice and that the delinquents ought to be more or less severely dealt with. I believe that things have considerably improved, and I trust that that improvement may continue. But still this is a question which requires close attention, and the more attention that is paid to it the better.

I do not remember that my noble friend put any other questions to me, but if I have omitted anything or if there is any noble Lord who desires to obtain information upon any of the subjects which have been alluded to both yesterday and to-day I hope he will put a Question on the Paper and I will do my best to give him the information. I should like to conclude by re-expressing the sentiment which I have heard on all sides in the course of this debate. Whereas we hear an immense amount about the virtue of economy and the necessity for saving, yet when it comes to individuals the War Office in particular is subjected to continual pressure to increase its expenditure in almost every direction. The War Office does its best to resist pressure of this kind, and so far as I know it has exerted itself as much as it can to withstand this pressure; but as every one is aware, the task of resisting these demands is by no means as easy a one as it might appear.

LORD ST. DAVIDS

My Lords, it appears to me that the debate to-day has been a most valuable one. I think this House and the country ought to be particularly obliged to the noble Viscount opposite (Lord Midleton) and to the noble Earl (Lord St. Aldwyn) for the speeches they have mode. As a humble member of the House I hope I may be allowed to express the wish that the noble Earl opposite could find himself able at such a critical time as this to join more frequently in our debates, as I am sure it would be an unmixed advantage, to the country. The noble Earl told us that he was sure, how ever large the sums the country might require, that those sums could be found. I was particularly glad to hear the noble Earl, with his great experience, say that, because—and this is the reason why I intervene in the debate this evening—there have, been most mischievous statements made in both Houses of Parliament. It has been said in this House that the country is heading for bankruptcy. That ought not to be said—first, because it is not true; and, secondly, because it would prejudice our attempts to raise money abroad. We have raised money in America and we shall almost certainly have to raise more there. How do you think you can send a representative to America for this purpose if members of this House, noble Lords who ought to have a higher sense of responsibility, get up and say that the country is heading for bankruptcy?

It is quite true, and everybody connected with finance knows it, that the Government may have very great difficulty in raising the sums they require. But that is because our financial system has not been mobilised for war, and before the war is over it will probably need to be mobilised for war. But I want to put an extreme case. Supposing this war were to go on for three years longer and during that period, in addition to what we have borrowed already, we borrowed £4,000,000,000. You would have difficulty in raising it, but you would have no serious difficulty in paying the interest on it; and as long as you can pay the interest there is no chance whatever of your being bankrupt. When we began this war our taxation—I am speaking in round figures for simplicity—was about £200,000,000 a year. When the changes of taxation that are now being carried out are completed we shall be raising nearly £400,000,000 a Year. Does anybody think that this country could not raise an additional £200,000,000, and would not gladly do so, rather than that the country should go bankrupt? That £200,000,000 a year additional taxation which you could raise would pay the interest on £4,000,000,000, and you could carry on the war for three years longer at the same extravagant rate. I say that in the face of those figures, which are undoubted, no member of this House or of the other House ought to get up and say that the country is heading for bankruptcy. The thing is absolutely out of the question. We may have difficulty in London in raising money, but that is a very different thing.

I will give an illustration of what I mean. Supposing a member of this House has a landed estate quite unencumbered and producing £100 000 a year in the way of income. That noble Lord may not have a shilling of ready money at his bank. He may be spending all his income, and therefore his estate does not help us in raising a War Loan as we are doing it now. The noble Lord with that huge income may not be able to subscribe to a War Loan, but he has that income of £100,000 a year, and that would pay 5 per cent. on £2,000.000. Therefore it is perfectly obvious that, if the Chancellor of the Exchequer is forced to, he can find means of somehow mobilising everybody's credit so that the credit of a man who has a huge landed estate but no ready cash may be used, somewhat on the lines on which it is done in Germany, to improve the credit of the country as a whole. Germany is carrying out that principle to, you might say, an absurd extent. Germany and all it contains is practically going to the pawn shop. But without adopting any such extreme course for raising money as Germany is doing—it is perfectly obvious to anybody who understands the subject that the resources of this country and our powers of borrowing are enormous. I repeat most emphatically that nobody ought for one moment to hint that this country cannot as long as the war lasts carry out every liability it undertakes.

The noble Marquess the Leader of the House, as I understood his remarks yesterday, suggested that we ought never to reproach the Government for anything unless we had warned them before. Well, at a very early stage in the war I took occasion to say in this House that you must have extravagance in the War Office because the man did not live who could spend without waste the money that was being spent. What has happened? As the noble Earl opposite has said, you have since had the control of one great item of expenditure taken away from the Secretary of State for War altogether—I refer to the control of munitions. But now another thing has been taken away from the Secretary of State for War. At the beginning of the war, in addition to everything the Secretary of State now has to do, he had munitions and recruiting. In recruiting you have the noble Earl, Lord Derby, working very hard, and he has helping him the agents of the two great political Parties all over the country, the local authorities, and the Labour leaders—and even with that help he has plenty to do. Up to the other day recruiting was one of the small items of the work of the Secretary of State for War.

I want your Lordships to look at what the Secretary of State for War still has to do in the way of spending money. It is difficult to know just what is being spent, but I am taking it that roughly we are spending in this country from now on at the rate of about £1,900,000,000 a year. Supposing you assume that the debt charge and the ordinary expenditure come to in round figures £200,000,000 —I think it will be less—and that the Navy is costing, as we were told the other day, about £400,000,000; that leaves an outlay of £1,300,000,000 being spent for the purposes of the war. I have no notion, and I do not suppose anybody in the world has any notion, how much of that is being spent by the Secretary of State for War and how much is being spent by the Minister of Munitions. I make an absolutely wild guess, and I do not know whether the Government can correct my quess, that the Minister of Munitions may be spending £300,000,000 a year, and the Secretary of State for War £1,000,000,000 a year. Now £1,000,000,000 a year is a lot of money. I do not think anybody would like to say that before the war began there was no waste in the War Office. There is a certain amount of waste everywhere. But before the war the Secretary of State for War was spending about £30,000,000, and now it has gone up, assuming that my figures are more or less correct, to £1,000,000,000. I do not believe there is a man living who can spend £1,000,000,000, or even half of it, without enormous waste. I do not believe it is possible.

You have the Prime Minister administering the War Office for the time being. I am sure the Prime Minister would work as fast and do as much in a week as any other man in the country—my own opinion is he would do a great deal more—but the Prime Minister has other duties. He has first of all the presidency of the War Council, to which most of us would like him to devote the whole of his time. Is it in his odd moments, after doing the absolutely requisite work at the War Ace of carrying on the war and raising an Army, that he is to try and make economies in £1,000,000,000? My Lords, the figure has only to be stated for the absurdity of it to be apparent. You have decentralised already. You have cut off munitions and recruiting. If the administration of the War Office is to be economically affected it is perfectly clear that the Government must cut off a great deal more. No man living can spend this vast sum with advantage. Therefore I would suggest most earnestly to the Government that what they need, above all, is to find further methods—I will not even suggest what departments they should cut of—of decentralising at the War Office until in the end they may perhaps come to a point when the work left may be such as one man can do.

THE PRESIDENT OF THE BOARD OF AGRICULTURE AND FISHERIES (THE EARL OF SELBORNE)

My Lords, we have had grave warnings to-day and yesterday from my noble friends opposite on the subject of the national expenditure on the war, and we on this Bench know that they are animated with nothing but the purest patriotism in the warnings they have uttered and in the criticisms they have felt it their duty to make, and we acknowledge on our part that those who make those criticisms are entitled to do so by their experience and their knowledge of the affairs of which they speak. I was particularly pleased to hear the noble Earl, Lord St. Aldwyn, say in this House that we have the financial strength to carry through this war to the bitter end. His warning was addressed against making the financial burden that the nation will have to bear after the war heavier than it need be owing to insufficient supervision of expenditure now. Lord St. Davids also spoke as to our resources. If I may be allowed to say so, the speech of the noble Earl is a real solid contribution to the financial strength of this Empire in the face of the world, coming at this moment, because his authority in these matters is not confined to his native land but is world-wide.

I turn to the criticism which has been levelled against the war expenditure. My two noble friends on the Front Bench opposite—Earl St. Aldwyn and Viscount Midleton—are in a singular position in this matter. Your Lordships have learnt from their speeches how capable they are of criticising the control, or absence of control they put it, of the Government over the expenditure of the Navy and the Army during this war. Yet there are no two men in the country who from their own experience know better how difficult it is to exercise that control. Lord Midleton was Secretary of State for War during the South African War, and no one knows better than he how difficult it is for the Secretary of State to control military expenditure during war time, and Lord St. Aldwyn said to us to-night that from his experience in war time the technical control of the Treasury became. impossible. My Lords, if in the South African War Lord Midleton found his task so difficult, and Lord St. Aldwyn that it was impossible for the Treasury to control the spending Departments, does it not follow that the task which the Ministers in charge of those Departments and the whole Cabinet have had to fulfil in this war is ten times greater? However we look at it, we are always brought back to this point—the stupendous nature of the task which Lord Kitchener has had to face—

VISCOUNT MIDLETON

Hear, hear.

THE EARL OF SELBORNE

And the gigantic size of the present war. Every speaker on that side has referred to the immensity of the task set to Lord Kitchener. I do not think they have quite sufficiently allowed for the influence of the element of time. Not only was Lord Kitchener's task stupendous, but he had to work at a pressure such as no man has ever had to work at in similar circumstances. The fact that an Army of 160,000 has been expanded in a little over twelve months to an Army of more than 1,000,000, men in the field is sufficient proof of the, extraordinary character of the work which, Lord Kitchener had to do and accomplished. Yet all Lord Midleton's criticisms were really addressed to the military administration. I know my noble friend too well not to know that he would very carefully weigh and examine all the cases of apparent maladministration brought to him; but I am not prepared, until I know what answer Lord Kitchener would give, to admit, any more than I am able to rebut, the evidence he brought forward What I would say to him is this. I am sure my noble friend would not wish that Lord Kitchener had not been appointed Secretary of State for War. The whole nation acclaimed that appointment at the time it was made as the best possible in the circumstances, and speaker after speaker in this House, no matter from which side he has spoken, has testified to nothing except his wish to give Lord Kitchener every support, he can in his responsibility. Therefore the noble Viscount would not for a moment have wished Lord Kitchener not to have been appointed. But he has said that Lord Kitchener's task was too great for any one man to carry out. The fault is not Lord Kitchener's but the nature of the task which the Government has set him.

VISCOUNT MIDLETON

Hear, hear.

THE EARL OF SELBORNE

Therefore the point of the criticisms really conies to this, that the Government ought at some earlier date than the present to have interfered more than they have done with Lord Kitchener's administration of the War Office. I will take up that point presently, but I think that is an accurate diagnosis of Lord Midleton's criticisms—

VISCOUNT MIDLETON

My noble friend suggests that I think the Government should have interfered earlier than they have done with Lord Kitchener's administration of the War Office. That would not be a correct rendering of what I said. I think the Government should have done with regard to finance what they have done in regard to munitions—namely, have afforded Lord Kitchener some relief by appointing a sort of general staff for finance, as was suggested last night in another place.

THE EARL OF SELBORNE

I will not quarrel about words, but the effect is very much the same. I think the effect which Treasury control during peace time has on the capacity of the average naval or military officer to face the responsibility of great expenditure in time of war is very unfortunate. The control of the Treasury in peace time is effective—that is to say, the country is assured that the Minister in charge of either of those Departments spends no money except under definite rules and after approval by the Cabinet, and the Cabinet, in cases of disagreement between the Chancellor of the Exchequer and the Minister concerned, has to decide. But the result is that during the greater part of his professional career the naval or military officer acts in a groove out of which he never can emerge, and he seldom or never has any financial responsibility of his own. When war comes men who have never been allowed any kind of discretion in the expenditure of small sums suddenly find themselves in charge of untold sums of money, and with no check upon their expenditure, and they really are incapable of bearing the burden. All these stories one hears of extraordinary extravagance in military administration almost always come down to the incapacity of some individual officer to be the spender of considerable sums of money. In the Admiralty, where I do not think the effect is quite so bad, the idealism of naval perfection blinds officers to the fact that there is also a financial side.

I come back to the point which is really the gist of the speeches made—Have the Government kept a sufficient control over the spending Departments? It has been suggested in debate here—I think last night and again to-night—that the proper method of effecting this control would be to establish a Board or Commission of Finance which would act quite independ ently of the Minister concerned, and would report direct to Parliament. I want your Lordships to consider that proposal for a moment and see where it leads. I agree that in times like these one cannot be bound in the trammels of constitutional theories which are very useful in ordinary times, but I am not yet prepared to go quite so far as to say that it is possible to relieve Ministers of all responsibility in the matter of the finance of the Departments for which they are constitutionally responsible. That is a proposition which would lead us far. But there is an objection which seems to me more practical and more important. How is it possible really to control the finances of the War Office at the present moment in the sense suggested, and in the sense in which we would all like to see it controlled, without interfering with the policy of the War Minister? That is really the crux of the whole situation.

It is suggested that into the War Office you can put an authority to relieve the War Minister of the burden of financial details and to report direct to Parliament as to the possibility of economy. I ask each one of your Lordships to consider that. Imagine such a Board or Commission, make it of the strongest men; let it be composed, we will say, of the two noble Lords opposite, Lord Midleton and Lord St. Aldwyn. You put them into the War Office to-morrow with this wide and all-important function and with the responsibility of reporting direct to Parliament. Is it conceivable that the time would not come, and conic soon, when Lord Kitchener would say to the Cabinet, "There is an authority in my Office which makes it impossible for me to carry out my war policy"? Every one of your Lordships must agree that there would be the gravest danger of such a result. Therefore I should be sorry to give my adhesion, or the adhesion of my colleagues, to that method of dealing with a subject the importance of which we recognise quite as fully as do noble Lords, and for which we are anxious, if possible, to find the solution. My noble friend Lord Midleton, when describing the nature of Lord Kitchener's task, told us that Lord Kitchener was at once Secretary of State for War, Commander-in-Chief, and Chief of the General Staff.

VISCOUNT MIDLETON

For a time.

THE EARL OF SELBORNE

Yes, for a time; and he asked how it was possible for any man at any time to combine those functions, more especially in a time like the present. I entirely agree with my noble friend. I do not think that it is possible for one man to hold or to administer those functions. But the noble Viscount must consider the circumstances in which Lord Kitchener came to the War Office. He came to the War Office by something very like a national vote. He came at a moment when the, General Staff had largely left the War Office, and he came not as a politician but as a soldier. Is it to be wondered at that he did not regard his position there exactly in the same way in which a politician would have regarded it? Was it, indeed, possible for him to go to the War Office and consider himself only a civilian Secretary of State without any kind of military responsibility? The point you are driven to is that when you take a man like Lord Kitchener in a crisis and put him in an Office like the War Office, you must leave him to do his work in his own way. It is not possible to ask such a man to do such a task, and then for his colleagues to be frequently jogging his elbow and asking him to do his work in a manner different from that in which he is doing it, I do not think there is any answer to that proposition as I have tried to state it.

But the present moment is different from the past, I quite agree. The period of construction is over, or almost over, and nobody has been quicker than Lord Kitchener himself to recognise the changing conditions. The General Staff is strong and in full working order, the Ministry of Munitions has been constituted, and the recruiting difficulty has been taken off his shoulders; and there is no reason to suppose that Lord Kitchener is not prepared to go further in the work of decentralisation. Therefore I come back to the position of the Cabinet—whether they ought to have interfered more in the past than they have done with the way in Which this Department has been administered, or whether they are doing all they can now to help Lord Kitchener to get over the difficulties which he recognises. As Lord St. Aldwyn said, no man has shown a greater capacity for economical administration of war than Lord Kitchener has.

EARL ST. ALDWYN

Hear, hear.

THE EARL OF SELBORNE

No one can suppose that the waste and extravagance which he would admit, has been to his liking. No one more sincerely regrets extravagance and waste than Lord Kitchener; but, as Lord St. Davids pointed out, how can any man have the spending of money to such an extent without there being some waste or extravagance? The Prime Minister informed the House of Commons yesterday that the Cabinet had appointed a Committee expressly to deal with the position of our national finance, only one aspect of which is dealt with in the Motion of my noble friend opposite. Lord St. Aldwyn is mistaken in supposing that that Committee has reported only in respect of the three comparatively small matters mentioned by the Prime Minister yesterday. The Committee has held many meetings, and has dealt with other and more important subjects. When the Prime Minister spoke of the scrutiny of contracts of a check on the waste of food, and about proposals for restoring on furlough to civil life and therefore to civil employment soldiers who were no longer fit for foreign service, he was, I think, only giving illustrations of efforts already made by the War Office to meet some of the subjects of criticism with which your Lordships have dealt. He did not wish to lead the country to suppose that those were the only subjects with which the Committee on Finance had dealt.

EARL ST. ALDWYN

Could the noble Earl tell us what the other subjects were?

THE EARL OF SELBORNE

I am afraid I am not in a position to make any statement on that subject to-day. I can only say, as a member of that Committee, that we are as deeply impressed as any one with the gravity of the questions with which we have to deal. We share Lord St. Aldwyn's confidence as to the power of this country to bear the financial burden of the war, but we feel —the whole Cabinet feels—acutely the consequences of extravagance. We admit to the full that the responsibility is upon us to do all in our power to check waste where waste is going on, and to tell the country that the burdens that they have to bear are very great, and that economy must begin in the Government itself.

Lord St. Aldwyn put a question to me. He asked "Have any of you Ministers in your own Departments reduced your staff?" Indeed, my Lords, we have. I speak for my own Department only, but I have no reason to suppose that it is in any degree exceptional. A very large number of men have gone from my Department to the war and to the Munitions Department, and only a small proportion of their places has been filled. Those who remain are doing, as their war contribution, the work of two men. In all respects I have endeavoured to put my Department on a war footing, and in so doing I have had the most cordial and loyal support of all my colleagues of every grade. I know that my right hon. friend the President of the Local Government Board has taken action in this way, and so have other Ministers.

Now I should like to say a word about the Munitions Department. Lord Midleton criticised the growth of the Department, the salaries of its officials, and the scope of its expenditure. He used a hard word. He said that the Office was still in a state of chaos. I think your Lordships ought to remember the conditions under which that Department was created. It is not for me to express an opinion as to whether that Department ought to have been created sooner. That story belongs to a Government of which I was not a member. But the whole country recognised that the Government were right in creating that Department, and that it was created to meet a very urgent need. I do not see how such a Department could have been brought into being with the celerity with which it was and the efficiency with which it has worked without some mistakes, much confusion, and waste of money. But the Department has justified itself. Ask any officer or man who has come from the Front what the position now is as regards the supply of munitions compared with what it was six months ago. I do not say that the whole credit of that is due to the action of the Munitions Department. That would not be strictly accurate. But that this Department has made a great contribution to the power of the country to conduct the war there can be no doubt. The Minister of Munitions has asked me to inform the House to-night of some of the steps he has taken in order to prevent that waste which your Lordships are so anxious to check. I think I had better read the Memorandum of the Department in its own words—

"Early in August the Ministry decided to institute a strong branch to deal with cost accounting, especially in connection with the construction of new factories, whether in connection with large armament works or purely of a national character. As soon as this branch had got into working order and established its relations with the different branches of the Ministry it was decided to extend its sphere and operations to cover a review of all important contracts.

"During the month of October this organisation was still further extended, and Mr. S. H. Lever, of the firm of Barrow, Wade, Guthrie & Co., chartered accountants, of London and New York, who had been originally in charge of the cost accounting branch, was appointed head of the financial department of the Ministry; and associated with him ale, as his second in command in this branch of the work, Mr. John Mann, Junior, of Glasgow, one of the leading Scottish accountants, and a strong body of experienced accountants and business men of the highest standing. Mr. Lever and Mr. Mann, together with many of their chief colleagues, have placed their services voluntarily at the disposal of the Government. In seeking the assistance of these distinguished gentlemen the Ministry has aimed at discovering the weak points in all existing contracts and to protect ourselves against extravagance in the future, at the same time controlling by an elaborate system of cost accounting the capital expenditure which is made on the various works which are constructed at national expense.

"This Department has the power to scrutinise all contracts proposed to be entered into by every other department of the Ministry. Members of it visit firms making munitions and obtain information about the costs on the spot.

"All departments of the Ministry clearly understand that economy is one of the prime objects to which they must have regard. It has already been possible through this Department to effect large savings and to obtain improved terms from manufacturers.

"Detailed instructions have been issued to contractors with a view to reducing expenditure and ensuring that the Ministry receive full value for their money. A system has also been set up for standardising the method of making advances of cash, machinery, or material to contractors.

"Systematic inquiries are being made into groups of existing contracts, and in the cases of certain running contracts it may be possible to revise the terms where they are unfair to the State. In any case, from the valuable knowledge which has been gained the Ministry is now being able to place contracts in many cases on greatly improved terms."

Now that is doing in the Munitions Department the very thing which I understand noble Lords opposite have contended should be done in respect of contracts at the War Office, and that is what the Prime Minister alluded to yesterday when he said that this scrutiny or examination of contracts was actually progressing at the War Office at the present time.

Then Lord St. Aldwyn expressed some dissatisfaction with the extent of the influence which we acquired over the policy of expenditure in return for the advances from this country to Allies. The relations of Allies in a great war must always be a matter of difficulty and delicacy. It was so in the old days. But I do not believe that any great war has ever been waged with less misunderstanding or with more cordiality and complete co-operation between Allies than has been the ease all through this war. The extraordinary difficulty of conducting a war of four Allies has been overcome by the skill of the Ministers of the Governments concerned, I believe to a greater degree than history has hitherto recorded. And in this very matter of the expenditure of subsidies, I am able to state that the Chancellor of the Exchequer has established cordial and intimate personal relations with the financial Ministers of the countries concerned, and he has been able to achieve, with their goodwill and reasonable allowance Of our point of view, a sufficient degree of influence over the manner in which the subsidies which he has found are going to be spent.

LORD ST. DAVIDS

May I ask a question? Two noble Lords criticised the salaries paid in the Munitions Department. Can the noble Earl tell us whether there are not a large number of men working in the Munitions Department for nothing—men who could have large salaries? I know it is so, but can the noble Earl answer that officially?

THE EARL OF SELBORNE

I cannot give any detailed reply about the salaries paid at the Munitions Office, but it is quite true that there are many gentlemen there who are in a position to earn large salaries but who are giving their time out of pure patriotism and receiving nothing. The noble Earl opposite was very severe on the Prime Minister. He quoted the Prime Minister's words in the House of Commons. Those words, he said, were admirable, but he asked whether they were going to be followed by action. Is it likely that the Prime Minister, with the immense sense of his responsibility which he has, would use such words in the House of Commons unless he intended that his Government should take action on this matter?

Our difficulties, as I have endeavoured to show, have been very great; and nobody knows those difficulties better than noble Lords opposite. There are no men in this country more alive to their sense of responsibility in this matter of finance, or more in agreement with noble Lords opposite as to its gravity, than my colleagues in the Cabinet for whom I have the honour to speak this evening. But if our responsibility is admitted and we do our best to fulfil it, is there no responsibility on the public at large? it is the duty of the Government to tell the public the truth about finance, and to try to urge them into the paths of economy, and to set the example themselves, but they must also be supported by public opinion. As my noble friend the Leader of the House said yesterday, the attitude of our population towards this question is not as satisfactory as the attitude of the German population. Our people are seized of the necessity for personal sacrifice, and are giving their lives voluntarily on a scale never hitherto known in history. But they have not to the same extent realised and understood that the smaller sacrifice of their luxuries and their means is necessary. Yet we have a great claim upon them. Look at the difference of policy in this respect carried out in this country and in Germany. In Germany the burden of the war has been deliberately put upon the poor. The German Government has done all it can to discourage any rise in wages or war bonuses. The most miserable allowances have been given to the dependants of the men who have gone to fight. The wages of the German soldier are very small. And yet the German Government has been spending money. Streams of money have been flowing, and it has gone mainly into the pockets of the manufacturers, merchants, and landowners, classes over whom the German Government has a direct and easy influence. It says to them "Give back your money in the form of loans," and the money goes out, comes back, and goes out again. We know that the cost of living has increased all through Germany, and that the poorest of the people have been having a time of great misery and distress.

How has it been in this country? From the very first the effort was that the burden of the war should not fall on the poorest shoulders. The whole nation united to do all it could to take from the shoulders of the poorest the burden that the war was sure to bring to the nation as a whole. The soldier, as compared with the soldier of other nations, is well paid, and we have considered it a point of honour to see that the allowances to his dependants—to his wife and children, to his father, or mother—should be on a scale which I think I may characterise as generous. The result has been that instead of the working classes of this country being worse off during the war than before, many of them have never been better off than they are at present. Do they now understand the obligation which patriotism enjoins upon them? The luxuries which they enjoy are very modest compared with the luxuries which we in your Lordships' House enjoy. Still I would appeal to them to put aside even their modest luxuries and consider that they too can make their contribution to victory just as much as their sons or their husbands in the trenches. The contribution which the working classes can make is, like that of all other classes of the population, to live on the smallest margin they can of their earnings, and to put the balance into War Loan. As the Prime Minister said last night, we all have to make far greater sacrifices than we have made before. The obligation is on the people as well as on the Government.

I have seen suggestions in the newspapers that the time has come for another general rise of wages. I express my personal opinion with a deep sense of responsibility. I believe it is quite impossible for this country to carry the burden of the finance of this war if there is not to be an end to these cycles of a general rise of wages. The Government have taken profits which may be called war profits; and the working man can no longer say that he is working for an employer who is securing huge profits out of the war, in which he, as a working man, is entitled to share. That was a point of view with which I had great sympathy. Unless you curtail profits I do not see what possible answer there is to a trade union which says, "Why should we not have a share of the profits which our employer is making?" But that phase has gone. The House of Commons is taxing war profits. Therefore I would appeal to the trade unions to show td their people that the country cannot bear an indefinite cycle of increased wages. I think no class of the population has shown greater patriotism or done greater service in this war than the leaders of the trade unions and the members of the trade unions themselves. We have had cases of strikes and rumours of slackness, but the bad side which comes to public knowledge is the exception. Nobody reads of the millions of trade unionists who, to the detriment of their health, at great pressure, inconvenience, and misery of life for want of sufficient accommodation, have toiled in this war as patriotically and as nobly as the men in the trenches or the men in the Fleet. The nation knows that the leaders of the trade unions have done all they can to help the Government in dealing with war problems affecting questions of wages and employment. Therefore I have no hesitation in appealing to them now to assist the Government in teaching all those who trust them and look to them for guidance that this question of national economy is one for every man, woman, and child in England of every class, and of course for the Government as responsible to the nation. But I think the people of this country are not very ready to take advice from the Government, especially when, as noble Lords opposite would say, the Government have not given them the lead they ought to have given. I am not endorsing that view, or accepting the justice of that criticism. The point I wish to make is this, that there are others besides the Government who can influence the people. I would ask the local authorities in each county and borough, as well as the leaders of every trade union, to join with the Government in bringing their influence to bear, so that the whole of our population should understand the importance of the problem which has been debated for two nights in your Lordships' House.

I do not accept the justice of all the criticisms that have been made. I have endeavoured to make an answer to some of them, and I think that with some of the points which I have put to them noble Lords opposite will not find it easy satisfactorily to deal. I emphasise once again the point that when you pick out a man like Lord Kitchener and give him a task like this you must leave him to carry out that task in his own way, until a moment comes when changed conditions supervene, as has occurred at this moment. The Motion as put down by Lord Peel was—though I do not think it was intended as such—not very far removed from a Vote of Censure, because the words are that His Majesty's Government should exercise "a more effective supervision and control." If accepted, that would, of course, imply the admission on our part that we had failed in our responsibility in supervision and control. We are not prepared to make that admission. Therefore if the noble Viscount were to persist in the present form of words we should not be able to accept his Motion. But if he will leave out the words "a more" and insert "an"—the Motion then reading "That, in the opinion of this House, it is the duty of His Majesty's Government to exercise an effective supervision and control of naval and military expenditure"—we shall raise no objection to the Motion.

VISCOUNT PEEL

My Lords, I am much obliged to the noble Earl for the many very valuable statements he has made. The noble Earl and other Ministers have spoken of the very great difficulties with which the Government have been confronted. I certainly never wished to suggest that I was not fully conscious of the extent of those difficulties. The noble Earl says that the Government will accept the Motion if the word "more" is left out, As I understand, it is taken to be a criticism of the Government. But I think it is not unfair to say that the statements made in this House of what has been done and is going to be done and the statements made by the Prime Minister last night really amount to an admission that more could be done than has been done in the past. I will amend the Motion as suggested. If the words "effective supervision and control" are carried out in deed and in fact, I do not think I could ask for anything more.

On Question, Motion (as amended agreed to.

House adjourned at twenty minutes before Eight o'clock, till Tomorrow, half-past Ten o'clock.