a
note of profound understanding, of invincible and personal determination,
but rarely heard in the early days of the war.

III

So much for the Workshops and the Navy. Now before I turn to the New
Armies and the Somme offensive, let us look for a moment at the present
facts of British War Finance. By April last, the date of my sixth Letter,
we had raised 2,380 millions sterling, for the purposes of the war; we had
lent 500 millions to our Allies, and we were spending about 5 millions a
day on the war. According to a statement recently made by the Chancellor
of the Exchequer (August 10), by March next our debt will have risen to
3,440 millions sterling, 1,060 millions more than it stood at in March
last; our advances to our Allies will have increased to 800 millions,
while our daily war expenditure remains about the same.

Mr. McKenna's tone in announcing these figures was extraordinarily
cheerful. "We have every reason," he said, amid the applause of the House
of Commons--"to be proud of the manner in which British credit has stood
the strain." The truth is that by March next, at the present rate of
expenditure, our total indebtedness (deducting the advances to our Allies)
will almost exactly equal "one year's national income," i.e., the
aggregate of the income of every person in the country. But if a man
having an income of L5,000 a year, were to owe a total of L5,000, we
should not consider his position very serious. "We shall collect a
revenue in one year equal to 20 per cent. of the whole debt (i.e., 522
millions sterling), and we shall be able to pay, _out of existing
taxation_, the interest on the debt, and a considerable sinking-fund, and
shall still have left a large margin _for the reduction of
taxation_"--words which left a comfortable echo in the ears of the nation.
Meanwhile British trade--based on British sea-power--has shown
extraordinary buoyancy, the exports steadily increasing; so that the
nation, in the final words of the Chancellor, feels "no doubt whatever
that we shall be able to maintain our credit to the end of the war, _no
matter how long it may last_."

But do not let it be supposed that this huge revenue is being raised
without sacrifice, _without effort_. It means--for the present--as I have
already pointed out, the absorption by the State of five shillings in the
pound from the income of every citizen, above a moderate minimum, and of a
lesser but still heavy tax from those below that