That the country is drifting, all can see. But whither is it drifting? Taxes are mounting upward and still upward, while trade is steadily going downward. The Ship of State is in distress. A pilot is needed whose qualifications consist in something more than an ability to box the whole political compass, or to abandon the making of screws for the forging of chains for a hitherto free people.

In the war with America it took seven long years to bring Parliament to its senses. But in the end the right-seeing minority became the majority, and won the day. On March 4, 1782, General Conway moved and carried in Parliament, without division, the motion, "That the House would consider as enemies to the Sovereign and the Country all those who should advise the continued prosecution of the War." After this the way towards a treaty of peace was clear. What happened then may happen now. And yet the war in America cost less than one-third of what the present deplorable struggle in South Africa has swallowed up. The Americans, too, were revolted British subjects, while the citizens of neither of the republics in South Africa could be so designated.

The Boers have made overtures for peace more than once. From the start they have invoked arbitration, and have declared themselves ready to abide by whatsoever verdict should be rendered. Can the cause of any nation be a just or righteous one that refuses to submit to this civilised and Christian method of settling disputes? Arbitration was successfully invoked in the case of Venezuela. Why should it not prove of equal potency in the present conflict? The door is still open for an honourable and lasting peace. But the negotiations must be put into trustworthy hands. No one on whom even the breath of suspicion rests should be entrusted with such. Can it be doubted that negotiators of the unquestioned honour, ability and fairness of Mr. Morley, Lord Coleridge, Mr. Bryce, or Sir Robert Reid, would still be able to bring order out of chaos and peace out of internecine war? Men such as these are known and trusted by the Boers. Their word would be as good as their bond. Their promises, the Boers know, would be sacred, and carried out to the letter. Reliance could be safely put on such men, and on their knowledge of South African affairs as well.

The reassembling of Parliament is close at hand. A united opposition with a definite policy will use the opportunity presented to direct the attention of the people towards a sensible policy of conciliation. It will urge the offering of generous terms to an honourable foe, whose unpardonable fault, in the eyes of the present Government, is, "that their liberties they prize and their rights they will maintain" even to the last man, rather than submit to the disgraceful terms of "unconditional surrender." Englishmen would do the same under like circumstances. Can Englishmen, therefore,

not respect a brave enemy battling for something better than the total extinction of all national existence and the abridgment of local self-government?

The Liberal party has to-day an opportunity such as comes but at rare intervals in a nation's history. It has the men and it has the ability to effect much. The question that the country is anxiously waiting to see decided is, "Will the Liberal party employ to the fullest extent the power and ability it possesses? Will it present a united front to its shaken and dispirited opponents? Will it, by taking a firm and unmistakable stand, compel the adoption of a policy that shall save the drifting Ship of State from striking on the rocks that loom ahead?"

A. P. GILMOUR.

NATIONAL AND LOCAL BORROWING.

So far, and to follow, here, and in South Africa, how is the cost of the war to be defrayed nationally and locally, the Government and the local authority being borrowers from the public, who in turn are borrowers from the banks, which again, as Walter Bagehot tells us, in the tenth edition of his Lombard Street, have, apart from a little till money, but a shadowy claim on the gold in the Banking Department of the Bank of England, which usually is much less than £2,000,000 for the 6000 odd banks of the United Kingdom, with liabilities not short of £2,000,000,000, with the truth told?

"If the aggregate of the bankers' deposits with the Bank were £5,000,000, £3,000,000 of the sum will be lent by the Banking Department, and £2,000,000 will be kept in the till (notes and coin). In consequence that £2,000,000 is all that is really held in actual cash against the liabilities of the depositing banks. If Lombard Street were suddenly thrown into liquidation and made to pay as much as it could on the spot that £2,000,000 would be all the Bank of England could pay to the depositing banks."

Not a bright outlook for £2,000,000,000.

How then, here, and in South Africa, is the cost of the war to be paid? Scarcely a graver question could be put, and as the great reserve finance resources of the kingdom have not been tapped by any Government since Pitt's time, evasion will be the answer of whatever Government may be in power. We shall be told that the finance precedents set by the long wars will be followed in the present instance, although the conditions are not only dissimilar, but absolutely opposed; and still the untapped finance reserves may remain untouched. Hence evasion. Where are the country banks of issue which Pitt had obedient to his will? They do not now exist. And the shareholders of existing banks, with the huge responsibilities of uncalled capital clinging to them, would be illadvised were they to sanction a policy of adventure in paper money of their own such as prevailed in the Pitt period. Then look at the relative social conditions now and then. At present, the population at large, is probably, in nine cases in ten, dependent on the profits of trade, with all forms of trade, severely strained by home and foreign competition; and in the one case in the ten the population is dependent on trade losses until liquidation is enforced by creditors. In other words, in each 100 of the population at large ten are

dependent on losses in trade, the number showing a tendency to 100 are dependent on trade Here, it will be alleged, the prevent so dire a calamity as

increase; and ninety persons in each profits which tend towards vanishing. trusts and combines are on the alert to a fall in prices, but at what cost? At the cost of the extirpation of the small producer and distributor; and when occasion offers, at the additional cost of skinning the consumer. In fact, the trusts and combines are a menace to social order, as when they have succeeded in creating new bodies of superseded men without the means of living, how is order to be maintained unless by musketry or the Maxim gun? On the other hand, in the old-time wars the population could stand as much feather-pulling as the De Beers ostrich; and were we to go back to the early wages of Yeomen at fourpence a day, he had a fowl in the pot, and was independent of wages, with his cow on the common, his pig rooting in the wood, his poultry chattering at his back door, and his garden suggestive of vegetarianism. Now the population at large, as before said, are dependent on the uncertain profits and the certain losses of trade, nominally at 6s. a day, as long as the worker has not passed into the pauper ranks, become a lunatic, or a jail-bird, mainly in either case because of the absence of the means of living. In other words, the population of to-day are, by uncertain employment, rents, rates, and taxes so shorn of their wool as to be unable to contribute towards the cost of the present war. So, to make a long story short, it falls to the lot of the present Government, if well advised, to tap possibilities of finance too long dormant, which now, used in the public interest, without injustice to any class or interest, would deliver England from a present false and perilous position in finance.

Apart from the war, there is no subject so urgent as that of national and local borrowing, and it is a pity that ignorance of its simplicity and ease of apprehension should keep men aloof from its apprehension. Yet, in a large sense, national borrowing obviates direct taxation by, as it were, drawing bills on the future which the future will have to pay. On the other hand, local borrowings affect rates grievously by increasing them; and in an ultimate analysis the increase may be likened to a slide on a well-greased inclined plane with certain trouble at the bottom. The slide on the inclined plane is really tempting before the venture, but highly disconcerting after. The generation now living suffer mildly from the ache of hereditary rates, but the generation in succession is likely to be rate-scoured as if by Epsom salts. Moreover, the generation in succession will be saddled with worn-out plant, decaying buildings, and worthless machinery, now proudly recognised in balance-sheets as valuable assets. In fact, the next generation, besides having to pay off the debts of our making, may have forced upon them the disagreeable necessity of contracting new loans to provisionally wipe

out old ones, to pass on the growing, rolling snow-ball of debt to their posterity, certainly for repudiation; indeed, honest payment will have become impossible. Obviously, from these remarks, local borrowing in particular should be as engaging as the last novel, with its fair measure of plot, interest, and slimness. "Dear me,' some one will exclaim, "were there promoters in those days?" Another may ask "whether the business was then a good one— that is to say, were its rewards better than now ?" Still another may remark" that morality must have been at low water to impose on us worn-out lifts, absurd pumps, leaky reservoirs, worm-eaten tramcars, worthless wooden paving, and baths and wash-houses of a type and in a condition that no self-respecting person would approach nearer than he would a small-pox hospital." Continuing, "as for the other assets bequeathed to us, well, for my part, I wish we did not own them." The residues of national borrowing, chiefly in old iron and ont-of-date fortifications like the old martello towers of the south coast, get off with milder criticism. "Look at the Tower, Windsor Castle, the National Gallery, the South Kensington Museums, which latter in their rudimentary development were for years a butt for ridicule as the Brompton Boilers, and many other national treasures which nowadays we would not like to be without." Indeed, such high appreciation will urge that the nation's money could not have been laid out to better purposes. The philanthropist will dissent by recalling a case the other day before a London magistrate typical of many others. It was a case of embezzlement of small sums by a carman, before Mr. Rose, at the West London police-court. The carman was paid 25s. a week, out of which he maintained himself, a deaf and dumb daughter, and two others, after paying 15s. a week for rent-the rooms at that not of a high order may be assumed. The police testified to the respectability of the carman, who, on being asked what he did with the money, said that he had been tempted to buy food with it. On that the magistrate gave him the benefit of the First Offenders Act, binding him over and discharging him. Whatever economists may say to the contrary, the case is a protest against national institutions having taken precedence of the provision of suitable dwellings at small prices for all who stood in need of them. But that is not all. The decision, just on moral grounds, is a precedent which opens a wide door for the relief of offenders of the kind, due not to personal vileness, but to an abundance among others which neither takes heed nor care for the lives sacrificed.

The Metropolitan Board of Works was the first systematic borrower for local purposes on a large scale, and it has now become a dealer in credits to other local bodies-a modern banker, in facton the basis of a difference between what it pays for its own borrowings and what it charges for loans; obviously a sound comVOL. 157.-No. 1.

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