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1016 submarine department was also set up, composed of the most experienced men serving at sea, who invited suggestions from any sailor in the fleet. Then there was the Board of Inventions, presided over by Lord Fisher, and containing some of the great- est men of science in the country. But Sir Edward Carson, the First Lord, did not claim that any certain remedy had been found. The figures proved this only too clearly. In the first three months of unrestricted submarine warfare, Great Britain lost nearly 1,500,000 tons of shipping (out of a total of some 20,000,000 tons of which 8,000,000 long were being used for war purposes), and April, the last of these months, was the worst of them all. In one week alone of April 41 British vessels of over i ,600 tons and 16 under that tonnage were sunk.

These alarming figures naturally suggested the advisability of compulsory rationing, and both in the press and in Parliament there were loud calls in May for its immediate in- More stitution. Lord Milner told the House of Lords that

Confro/. the Government would only resort to it if con- vinced of its absolute necessity, but that meanwhile they were studying the various methods of rationing. The returns of shipping losses during May and subsequent months, though grave enough, showed a marked improvement on the April record, and the Food Ministry stated that the prospect of compulsory rationing was steadily receding. But people were worried by the shortness of food, especially bread, sugar and milk, which led to queues at shops, by the high prices especially of meat and by the uncertain policy of the Food Controller. He instituted a campaign to explain to people why they should eat less bread and meat. He asked people to give up the use of starch. But he was slow to fix retail prices, and a cry arose that he allowed the public systematically to be robbed by profiteers owing to his inaction. Steps were eventually taken in June to curb specu- lation in food, by prescribing that meat salesmen should sell only to retail butchers or consumers, and that the prices charged on reselling should not exceed a certain maximum. More confidence was felt in the Food Ministry when in the middle of June Lord Devonport resigned the controllership owing to unsatisfac- tory health, and Lord Rhondda, whose reputation for getting things done had been increased at the Local Government Board, was prevailed upon to accept the post.

Mr. Neville Chamberlain's proposals for national service were formulated in February. The object was to secure substitutes to replace the men taken for active service, and to Military draft labour from unessential to essential trades. He B//7o7 called for volunteers from men between 18 and 60, 1917. asking willing workers to enter their names on a

register; and the Government introduced a bill estab- lishing a Ministry of National Service. The bill was not, however, well received; the Labour party were afraid lest industrial conscription should be introduced by a sidewind; and the whole scheme proved somewhat abortive. But the need of the army for more men was urgent, and the Government introduced towards the end of March a new Military Service bill, providing for a fresh examination of discharged and rejected men; the authorities hoped by this means to secure 100,000 fresh recruits in three months. Drastic as this measure was, Lord Derby in the House of Lords said that larger measures would be necessary.

The new Chancellor of the Exchequer, Mr. Bonar Law, lost no time in making a further effort to raise money on a large , scale for the war. At a great faceting at the Mansion o/*/W7. a/ * House on Jan. 5, with the Prime Minister by his side, he announced the conditions of a new loan. It was to be a 5% Government stock issued at 95, and arrangements were made for converting previous war issues into the new stock. The lowest individual sum accepted would be 50, or 5 through the Post Office, and bankers would give facilities to their cus- tomers to subscribe. There was also a tax -compounded 4% loan to be issued at par. The new loan was a great success, yielding over a thousand millions sterling subscribed for by five and a quarter million people. The money was badly needed, as the expenses of the war were mounting rapidly. Mr. Law obtained a vote of credit in December 1916 for 400,000,000,

and on Feb. 12 1917 two votes of credit amounting together to 550,000,000, the largest sum ever asked hitherto at a single sitting in the financial history of the country. He told the House that the average daily cost of the war had risen to 5,790,000. It is not surprising that in these circumstances, and with the enormous development of Government offices and staffs, there should have been an outcry in Parliament against what Lord Midleton called an uncontrolled orgy of expenditure. But, in spite of protest, the expenses continued to mount. Before the introduction of the budget, Mr. Law had to obtain in March a further vote of credit for 60,000,000 to meet unfore- seen items of expenditure. In the budget he proposed Mr - Law's no new taxation, but increased the entertainments Budget. tax and the tobacco duty, and raised the excess- profits duty from 60 to 80 per cent. He explained that 26 % of the war expenditure had been provided out of revenue. Im- mediately after the budget, on May 9, he came once more to the House of Commons, this time for a vote of credit of 500,000,- ooo; and on July 24 the largest vote of all, 650,000,000, had to be obtained, and it was recognized in debate that the country was rapidly reaching the limit of its possible expenditure. Two more votes, for 400,000,000 in September, and for 550,000.000 in December, were needed before the end of the year. In this autumn, Mr. Law put " on tap " an entirely new form of " continuous " loan, unlimited in amount, in the form National of national war bonds, bearing interest at 5 %, and 4 % Bonds. free of income tax. By Jan. n 1919 1,446,625,613 of these bonds had been sold, and nearly 50,000,000 of small post-office bonds had been subscribed for. It may be mentioned that the pressure of the war was shown this year to have broken down many cherished financial prepos- sessions. The passage of the Corn Production bill has been already mentioned. A committee on commercial and industrial policy, of which Lord Balfour of Burleigh, a life-long free trader, was chairman, recommended in February: Modifica- (i) the taking of special steps to stimulate, where ^ ons ol economically desirable, the production of food-stuffs, Trade. raw materials and manufactured articles throughout the Empire; (2) the adoption of Colonial Preference; and (3) the establishment of a wider range of customs duties. Moreover the Government of India, in spite of determined opposition from Lancashire, increased, and was supported by the Government at home and by the House of Commons in increasing, for revenue purposes, the import duties on cotton, without imposing any countervailing excise.

These tendencies were accentuated by the proceedings of the Imperial War Cabinet and Imperial Conference. The Imperial War Cabinet began its sittings in March, the Prime Ministers of Canada, S. Africa, New Zealand and New- imperial foundland and the Secretary of State for India Cabinet (advised by Indian and Anglo-Indian councillors) sit- 1917. ting, along with the British Prime Minister and the members of his War Cabinet, to determine matters essential to the conduct of the war, as well as to consider imperial policy in regard to terms of peace. Mr. Hughes, Prime Minister of Aus- tralia, was unfortunately detained at home by political compli- cations. Sir Robert Borden explained, in a speech on April 2, that the various Prime Ministers met in the Imperial War Cab- inet as equals, though the British Prime Minister presided, primus inter pares. Each nation of the Empire thus had its voice upon questions of common concern, while preserving perfect autonomy. " For many years the thought of statesmen and students in every part of the Empire has centred round the question of future constitutional relations. It may be that now, as in the past, the necessity imposed by great events has given the answer." At the end of April Mr. Bonar Law announced in the House of Commons that the Im- perial War Cabinet had accepted the principle of Imperial Preference; but there was no intention of making any change during the war, nor did it involve the taxation of food. Mr. Lloyd George, when receiving the free- dom of the City of London, said at the Guildhall that one of