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 far heavier casualties, have been estimated at amounts ranging as high as L200 millions.  The Chancellor was sure that he was within the mark in saying that it will be at least L150 millions.  Their normal pre-war expenditure was L130 millions, so that they will have to face a total expenditure at the end of the war of L720 millions.  On the other side of the account their pre-war revenue was L150 millions.  They have announced their intention of this year raising additional permanent Imperial revenue amounting to L120 millions.  From the nature of the taxes the