inisters themselves.

His first point is with regard to the increase of expenditure. The
alarming rate with which our expenditure has so steadily grown appears
to be paralleled also in Germany. Up to June, 1916, Germany's monthly
expenditure was L100 millions. It has now risen to over L187 millions.
That means to say that their expenditure per diem is L6-1/4 millions,
almost the same as ours, although our expenditure includes items such
as separation allowances and other matters of that kind, borne by the
States and municipalities in Germany, and so not appearing in the
German imperial figures.

As to the precise extent of the German war debt, there is no
certainty, but the Chancellor was able to tell the House that the last
German Vote of Credit, which was estimated to carry them on to June or
July, brings the total amount of all their Votes of Credit to L6200
millions, and that it is at least certain that that amount has been
added to their War Debt, because their taxation during the war has not
covered peace expenditure plus debt charge. Up to 1916 they imposed no
new taxation. In 1916 they imposed a war increment tax, something in
the nature of a capital levy, which is stated to have brought in L275
millions. They added also that year L25 millions nominally to their
permanent revenue. In 1917 they added in addition L40 millions to
their permanent revenue, "Assuming, therefore, that their estimates
were realised, the total amount of new taxation levied by them since
the beginning of the war comes to L365 millions, as against our L1044
millions. This L365 millions is not enough to pay the interest upon
the War Debt which had been accumulated up to the end of the year."

Mr Bonar Law then proceeded to give an estimate of what the German
balance-sheet will be a year hence on the same basis on which he had
calculated ours. With regard to our position, he had calculated that
on the present basis of taxation we shall have a margin of four
millions at the end of the present year if peace should then break
out. As will be shown later, this estimate of his is somewhat
optimistic, but at any rate our position, compared with that of
Germany, may be described as on velvet. A year hence the German War
Debt will be not less than L8000 millions. The interest on that will
be at least L400 millions, a sinking fund at 1/2 per cent. will be L40
millions. Their pension engagements, which will be much higher than
ours owing to their f