substantial revenue without increasing prices or causing unemployment, though in the case of motor cars they might, perhaps, have neutralised some of the effects of a trade expansion due to a change in world habits. An unforeseen effect of the silk and McKenna duties had been to expose a variety of ancient works of art to taxation on being imported into England, and, as this was no part of his purpose, he proposed, as from May 1, to exempt from Customs duties all goods more than 100 years old, except wines and spirits.

At the same time Mr. Churchill announced two more measures which the Government intended to take as a result of the previous year's financial experience. Owing to the wave of dumping which had taken place between the announcement of the silk tax and the McKenna duties and the final passage of the Finance Bill, heavy losses had been caused to the Revenue and great injury and disturbance to the trades concerned. To prevent the recurrence of such trouble in future new duties would apply as from the earliest date practicable after the introduction of a ways and means resolution imposing them, and importers would be required to give security for the duty in the interval between this date and the sanctioning of the duties by Parliament. The other measure related to Imperial Preference. The results which the extended preference given in the previous year had produced were so satisfactory that the Government proposed to apply to all the articles concerned (i.e., chiefly wine, dried fruits, and tobacco) the principle of a ten-years' guarantee given last year to sugar.

Coming to the revenue for the ensuing year, Mr. Churchill caused general surprise by the moderation of his estimate of the yield from the existing sources of revenue. So far from counting on an expansion, he forecasted a decrease of 2,444,000l. in tax revenue, and of 4,918,000l. in non-tax revenue, the chief drops being in the corporation profits tax and the special receipts. Expenditure having been already placed in the Estimates at 812,600,000l., this left the Chancellor with a prospective deficit of 7,900,000l., unless he opened new sources of revenue. In this pursuit he had recourse to a number of schemes of which he had already given notice, and in which he persisted in spite of the strong remonstrances which had been raised by various influential sections of the public.

The first was a tax on betting. The Government, he said, did not intend to change the law or make anything legal which was at present illegal. He proposed to tax only legal betting by putting a tax of 5 per cent. on every stake made on a racecourse or through a credit bookmaker. The tax would not be imposed before November 1, so that its yield in the first year was not estimated at more than 1,500,000l., but in a full year it would probably produce 6,000,000l. The second of the controversial

taxes was a duty on imported wrapping-paper of 163 per cent. ad valorem, estimated to yield 400,000l. in the first year and 550,000l. in a full year. The third proposal made in defiance of a strong public opposition was to "raid " the Road Fund to the extent of 7,000,000l., after first augmenting its funds by increased taxation on heavy motor traffic which would produce 2,300,000l. in a full year. Other new sources of revenue were an extension of the McKenna duties to cover commercial motor vehicles (estimated to produce 350,000l.), the reimposition for ten years of the key industry duties which were to expire in August, and the reduction of the time credit to brewers for the payment of the beer duty from three to two months. This, he explained, meant that he would get the duty of thirteen months in twelve, and he estimated the gain at 5,500,000l. Finally, on the strength of a promise from the French Minister of Finance, he ventured to add a payment on account of the French Debt of 4,000,000l. to his prospective revenue.

The total in this way was brought up to 824,750,000l., giving a surplus of 14,109,000l. Of this sum Mr. Churchill proposed to place 10,000,000l. to the credit of the Sinking Fund, to make up for the 10,000,000l. which he had taken from it in the year just closed to pay for the coal subsidy. (He had, in addition, devoted to the same purpose the surplus of 4,000,000l. which Mr. Snowden had left him, and which also should normally have gone into the Sinking Fund, but this he did not propose to replace.) The remaining 4,000,000l. he desired to hold in reserve, chiefly to finance the proposals of the Coal Commission.

In conclusion, Mr. Churchill pointed out that all his estimates were based on a peace footing. If a severe and prolonged paralysis of industry should overwhelm the country, he confessed that he would be forced to propose supplementary taxation, both direct and indirect, on a substantial scale. Assuming, however, that the country would not be subjected to this trial, he thought that, owing to the increased yield of taxes and the disappearance of some items of expenditure, next year's Budget could be made to show a surplus of about 23,000,000l.

Mr. Churchill had stated towards the end of his speech that the great objective on which his efforts had converged during the preceding six months had been to pay the whole 24,000,000l. of the coal subsidy without impairing the 50,000,000l. Sinking Fund for the redemption of debt. There was a general consensus of opinion that this was a praiseworthy object, and no item in the Budget met with more general and hearty approval than the raising of the Sinking Fund for 1926-27 to 60,000,000l., in order to replace the deficiency of the previous year. In other respects the Chancellor's finance came in for vigorous criticism. Mr. Lloyd George pointed out that in his defence of the restoration of the gold standard he had omitted to state its injurious effect

on exports; it had undoubtedly helped to restrict coal exports, and so was responsible for the addition of millions to the subsidy. Mr. Snowden called attention to the increase in the debt services of 3,250,000l. instead of a promised reduction of 5,000,000l. The reason, he held, was that the average rate of interest paid on Treasury bills was 4 per cent., whereas the banks themselves borrowed at 3 per cent. This showed that national and international finance had a grip on the Government which could not be allowed to continue without bringing financial disaster on the country. He also pointed out that there would have been no need to raid the Sinking Fund of 4,000,000l. if part of the supertax had not been unnecessarily given away in the previous year. Both the Liberal and Labour Parties gave notice that they would strenuously oppose all the Chancellor's new tax proposals.

In the course of the preliminary debate on the Budget resolutions, Sir R. Horne took occasion to make a belated criticism, from the Conservative point of view, of the Chancellor's economy proposals. He described them as "a series of makeshifts by which the contribution of the Exchequer to the social services had been whittled away while the depressed industries of the country had been left to bear a disproportionate share of the burden." That was a record which he thought even the most ardent supporter of the Government could scarcely regard with satisfaction. In his reply to the debate, Mr. Churchill said that criticism had been offered under the five main heads of credit, economy, Road Fund, betting tax, and stabilisation of Imperial Preference. In answer to Mr. Snowden's strictures he asserted that the joint-stock banks only held a small fraction of Treasury bills, and that their prosperity was built up on foundations other than the favourable terms which they obtained under the present financial system of the Exchequer. In the matter of economy, he challenged his critics to show how he could have done any better than he had. He informed the House that in the previous autumn he had invited the Press to make positive proposals for reducing the expenditure by 50 or 100 million pounds, but no answer had ever been forthcoming. In regard to the Road Fund, he thought it sufficient to say that no less than 21,000,000l. would be devoted in the coming year to the upkeep of the roads-3,500,000l. more than in the previous year. regard to the betting tax, he deprecated the raising of the moral issue, and maintained that its collection would be practicable, while he made light of the fear that it would lead to an increase in illegal betting. Coming finally to the stabilisation of Imperial Preference, he admitted that nothing could interfere with the discretion of Parliament to repudiate the guarantee that had been given, but he hoped that as time passed matters of Imperial consolidation would more and more cease to be the pawns of party controversy.

With

Before Parliament could proceed with the discussion of the Finance Bill, it was called upon to take cognisance of the state of emergency declared by the Royal Proclamation of May 1. In asking the House to grant to the Government the emergency powers which the proclamation showed to be requisite, the Prime Minister, on May 3, gave his version of the negotiations with the trade union representatives. He spoke with studied moderation, but naturally endeavoured to throw the whole blame for the breakdown on the other side. The declaration of the threat of a general strike on the Saturday afternoon had, he said, put the Government in a very difficult position, but he decided to ignore the challenge to constituted authority, and to ask the Trade Union Council to meet him. He and his colleagues had made up their mind that they would renew the subsidy for a fortnight, provided there was some reasonable prospect that at the end of that time a settlement would be reached. For this purpose they desired some assurance from the miners that they were prepared to accept the wage reductions recommended in the Report. Without such an assurance he considered that negotiations were doomed to failure beforehand. For two days he tried to obtain such an assurance from the Trade Union Council, but with everdiminishing prospects of success. Meanwhile his position was gravely compromised by the action of the Trade Union Executives, which came to his knowledge on Sunday afternoon, in sending out specific instructions to members in some of the most vital industries in the country to commence a strike the next day. At 11.30 on the same night he learnt that certain overt acts-not very important in themselves-interfering with the freedom of the Press had already taken place. These acts, coupled with the instructions already sent out by the representative leaders of the unions, made him realise that he had reached a point at which it would be impossible for the Government to pursue these negotiations any further.

Having thus explained the breakdown, the Premier proceeded to accuse the trade unions categorically of attempting to set up an alternative government. By ordering a general strike, which involved in many cases the breach of solemn contracts, the trade union leaders were, he said, threatening the basis of ordered government and bringing the country nearer to civil war than it had been for centuries past. He had become convinced on the previous night that those who sought peace were not in control of the situation, and that it would be wrong and dangerous of the Government to continue talking unless there was an immediate and unconditional withdrawal of the instructions for the general strike.

The Labour reply was given by Mr. Thomas in an unconvincing manner which reflected his own lack of conviction in the rightness of his cause. He admitted the substantial accuracy of Mr. Bald

win's account of what had taken place, but laid stress on the fact that an unfavourable atmosphere had been created for negotiations by the refusal of the owners to withdraw the lock-out, and by certain movements on the part of the Conservative Central Office and the Organisation for the Maintenance of Supplies which had aroused the suspicions of the trade unions. He maintained that in view of these activities no course was open to the trade union leaders but to organise a general strike. He still, however, made a strong appeal for the resumption of negotiations, and in this he was supported by Mr. MacDonald and Mr. Lloyd George.

After hearing the views of the Opposition leaders, Mr. Churchill restated the Government's position, as already defined by the Premier, with great precision and firmness. All talk about withdrawing the lock-out notices and giving time for further negotiations, he said, simply meant that the Government was to go on paying the subsidy. This was out of the question unless they had some prospect of matters being further advanced in the end, and the miners did not seem to have budged an inch from the position they had taken up in the previous July. The situation was complicated by the menace of a general strike, the object of which was to force Parliament to do something which otherwise it would not do. Parliament could on no account whatever submit to such a threat, and the Government would not reopen negotiations till the strike order was withdrawn. Mr. Churchill depicted in even stronger language than the Premier had used the unconstitutional character of the trade unions' action, going so far as to charge them with attempting to set up a Soviet.

The debate was unusually prolonged, and was conducted throughout in a restrained and dignified manner. No speaker, however, was able to find a way out of the impasse and, as far as Parliament was concerned, events were left to take their course. Members separated with a heavy heart, feeling that they were on the eve of a crisis comparable in its gravity to that which had existed at the outbreak of the war.

The miners' notices not having been removed, at midnight on May 3 the strike orders of the Trade Union Council came into force. The unions which had been ordered to cease work on that date were those of the railway and transport workers and printers, and of the iron and steel and building trades, and all these obeyed the call with remarkable unanimity. Consequently, on the next day the country presented an unwonted appearance. Practically no trains were running, and no trams or buses in the streets of the large towns; the morning papers appeared only in the reduced size which it had been possible to produce before midnight, and the evening papers not at all. The public naturally was gravely inconvenienced in going about its

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