"The total revenue for the current year is $2,545,000,000. Our last Peace Budget was $1,000,000,000. a.s.suming that the war would end by next March 1st, you must add another $590,000,000 for interest and sinking fund on the war debt together with a further $100,000,000 for pensions which would make the total yearly expenditure for the first year of peace $1,690,000,000. Deducting this from the existing taxation you get a surplus of $855,000,000. Thus after withdrawing the $430,000,000 received from the excess profits tax there still remains a margin of $425,000,000."

Indeed, to a.n.a.lyze British war finance to-day is to find something besides debits and credits and balances. It is a great moral force that does not reckon in terms of pounds or pence. There is no thought of indemnity to soothe the scars of waste: no dream of conquest to atone for friendly land despoiled.

Money grubbing has gone, if only for the moment, along with the other baser things that have evaporated in the giant melting pot of the war.

In England to-day there are only two things, Work and Fight. They are giving the nation an economic rebirth: a new idea of the dignity of toil: they have begot a spirit of denial that is rearing an impregnable rampart of resource.

Even more marvellous is the financial devotion of the French who present a spectacle of unselfish sacrifice that merely to touch, as alien, is to have a thrilling and unforgettable experience.

When you look into the French method of paying for the war you get the really picturesque and human interest details. In place of taxation you find that the war is being paid, in the main, out of the savings of the people. Instead of mortgaging the future, the Gaul is utilising his thrifty past.

Never in all history is there a more impressive or inspiring demonstration of the value of thrift as a national a.s.set. It has reared the bulwark that will enable France to withstand whatever economic attack the war will make.

The difference between the English and French system of war financing is psychological as well as material. The average Frenchman has a great deal of the peasant in him. He is willing to give his life and his honour to the nation but he absolutely draws the line at paying taxes.

This is why the French have made it a war of loans.

Go up and down the battle line in France and you get startling evidence of the French devotion to savings. More than one English officer has told me of tearful requests from French peasants for permission to go back to their steel-swept and war-torn little farms to dig up the few hundreds of francs buried in some corner of field or garden. Equally impressive is the sight of farmers--usually old men and women--working in the fields while sh.e.l.ls shriek overhead and the artillery rumbles along dusty highways.

Thus the French war debt will be met because of the almost incredible saving power of the French people. It is at once their pride and their prosperity. When all is said and done, you discover that with nations as with individuals it is not what they make but what they save that makes them strong and enduring.

One afternoon last summer I talked in Paris with M. Alexandre Ribot, the French Minister of Finance: a stately white-bearded figure of a man who looked as if he had just stepped out of a Rembrandt etching. He sat in a richly tapestried room in the old Louvre Palace where more than one King had danced to merry tune. Now this stately apartment was the nerve centre of a marvellous and close-knit structure that represented a real financial democracy.

"How long can France stand the financial strain of war?" I asked the Minister.

Light flashed in his eyes as he replied:

"So long as the French people know how to save, and this means indefinitely."

Although the invader has crossed her threshold, France continues to save. Every wife in the Republic who is earning her livelihood while her husband is at the front (and nearly every man who can carry a gun is fighting or in training), is putting something by. It means the building up of a future financial reserve against which the nation can draw for war or peace.

One rock of French economic solidity lies in her immense gold supply.

The per capita amount of gold is $30.02 and is larger than any other country in the world. The United States is next with $19.39, after which come the United Kingdom with $18.28, and Germany $14.08. Let me add, in this connection, that a good deal of the French gold is still in stocking and cupboard.

By the end of 1916 the war had cost France $11,000,000,000, which means an annual fixed charge of $600,000,000, to which must be added $200,000,000 for pensions, making the total fixed burden of $800,000,000.

All this cannot be paid out of savings, although in normal times France saves exactly $1,000,000,000 a year. But the Government has one big trump card up its sleeve. It is the large fortunes of her citizens. They have been untouched by the war because practically no income tax has been levied.

While the average Frenchman will sacrifice his life rather than submit to taxation, the upper and wealthy cla.s.s will do both. The annual income of the people of France is $6,000,000,000. Therefore a 12 per cent tax on this income would very nearly produce the entire fixed charge on the war debt. France looks into the financial future unafraid.

Financially, Russia ambles along like the Big Bear she typifies. In one respect her method of financing the war cost differs distinctly from her Allies in the fact that she has received heavy advances from England and France. From England alone she borrowed $1,250,000,000 which was expended for arms and ammunition and field equipment. The Czar's Empire has put out five internal loans while the rest of the money needed has been raised out of the sale of short term Treasury Bills, paper money issues and tax levies.

Except for the few millions of dollars obtained in the United States, Germany's financing--like her whole conduct of the war--is self-contained. Through five Imperial 5 per cent loans ranging from one to three billion dollars each, she has established a war credit of $12,500,000,000. This money--to a smaller degree than in France--has come from the great ma.s.s of the German people.

Other sources of revenue that are enabling the Kaiser to pay for the war are Treasury Bills sold at home and a taxation that is moderate compared with the colossal pre-war taxation which spelled Germany's Preparedness. At the time I write this chapter her war expenditure had pa.s.sed the $14,000,000,000 mark. Tack on to this Germany's peace debt of $5,000,000,000 more and you begin to see--with all the uncertainty of the war's duration--the immense burden that the Fatherland will have to carry. The war's drain on the German future is perhaps greater than that of any other country because all her war loans are long term. She has also loaned nearly $1,000,000,000 to Austria, Turkey and Bulgaria.

The Teutonic war cost has one distinct advantage over all others in that it is confined within the German borders. Hence Germany can do as she pleases with regard to its settlement. If the Mailed Fist obtains after the war she can clamp it down on her loans, wipe them out as she chooses and no one can offer a protest.

Now let us dump all these statistics that represent so much blood, agony and sacrifice into the middle of the table and strike a final balance sheet.

On one hand you have the a.s.sets of the warring countries as represented by their national wealth. For the Allies, including Roumania, they show a total of $273,000,000,000: for the Central Powers they register $134,000,000,000. If wealth is the winning factor then the Allies have the advantage in weight of buying metal.

Take the other side of the ledger and you see that up to November 1, 1916, the four princ.i.p.al allied countries, England, France, Russia and Italy, had spent on direct war cost approximately $34,000,000,000, while the total Teutonic war expenditures have been $21,000,000,000. To this actual war cost must be added the peace debts of the belligerent nations which would supplement the allied expense account by $17,465,000,000 and that of the enemy nations by $9,808,000,000.

Striking a grand total of liabilities, you find that if the war mercifully ends by August 1, 1917 (as Kitchener predicted it might), the fighting peoples would face a debt burden of all kinds that had reached $105,773,000,000.

After this colossal scale of expenditures you may well ask: Will it ever be possible for European finance to see straight or count normally again?

Be that as it may, no one can doubt that the battling nations, individually or with the marvellous team-work that kinship in their respective causes has begot, are able to pay their way while the struggle lasts. Grim To-day will take care of itself under the stress of pa.s.sion born of desire to win. It is the Reckoning of that Uncertain To-morrow that will prove to be the problem.

You cannot bankrupt a nation any more than you can ruin an individual so long as brains and energy are available. Peace therefore will not find a ruined Europe but it will dawn on a group of depleted countries facing enormous responsibilities. War ends but the cost of it endures. Just as present millions are paying with their lives so will unborn hosts pay with the sweat of their brows.

Meanwhile our Financial Stake in the Great Struggle is secure. How much more we will have to put into Europe's Red Pay Envelope remains to be seen. In any event, we have learned how to do it.

VII--_The Man Lloyd George_

The door opened and almost before I had crossed the threshold the little grey-haired man down at the end of the long stately room began to speak.

Lloyd George was in action.

I had last seen him a year ago in the murk of a London railway station when I bade him farewell after a memorable day. With him I had gone to Bristol where he had made an impa.s.sioned plea for harmony to the Trade Union Congress. Then he was Minister of Munitions, Sh.e.l.l-Master of the Nation in its critical hour of Ammunition Need.

Now he had succeeded the lamented Kitchener as Minister of War; sat in the Seat of Strategy, head of the far-flung khakied hosts that even at this moment were breasting death on half a dozen fronts. Just as twelve months before he had unflinchingly met the Great Emergency that threatened his country's existence, so did he again fill the National Breach.

England's Man of Destiny whose long career is one continuous and spectacular public performance was on the job.

But it was not the same Lloyd George who had sounded the call for Military and Industrial Conscription from the Peaks of Empire. Another year of war had etched the travail of its long agony upon his features, saddened the eyes that had always beheld the Vision of the Greater Things. The little man was fresh from the front and full of all that its mighty sacrifice betokened not only to the embattled nations but to the world as well.

Though we spoke of Politics, Presidents and the Great Social Forces that so far as England was concerned acknowledged him as leader, the current of speech always swept back to war and its significance for us.

"Since the war means so much to us," I said, "have you no message for America?"

Throughout our talk he had sat in a low chair sometimes tilting it backward as he swayed with the vehemency of his words. Suddenly he became still. He turned his head and looked dreamily out the window at his left where he could see the throng of Whitehall as it swept back and forth along London's Great Military Way.

Then rising slowly and with eloquent gesture and trembling voice (he might have been speaking to thousands instead of one person), he said:

"The hope of the world is that America will realise the call that Destiny is making to her in tones that are getting louder and more insistent as the terrible months go by. That Destiny lies in the enforcement of respect for International Law and International Rights."

It was a pregnant and unforgettable moment. From the Throne Room of a Mighty Conflict England's War Lord was sounding the note of a distant process of peace.

If you had probed behind this kindling utterance you would have seen with Lloyd George himself that beyond the flaming battle-lines and past the tumult of a World at War was the hope of some far-away Tribunal that would judge nations and keep them, just as individuals are kept, in the path of Right and Humanity.

But before any such bloodless antidote can be applied to International Dispute, to quote Lloyd George again: "This war must be fought to a finish."

These final words, snapped like a whip-lash and emphasised with a fist-beat on the table, meant that England would see her t.i.tan Task through and if for no other reason because the man who drives the war G.o.ds wills it so. What sort of man is this who goes from post to post with inspired faith and unfailing execution? What are the qualities that have lifted him from obscure provincial solicitor to be the Prop of a People?

"Let George do it," has become the chronic plea of all Britain in her time of trial. How does he do it?