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Concerning the last budget (January-June, 1919), I have not been able to get more information than that the total estimated revenue is 20,355,297,888 rubles, and the total estimated expenditure 49,100,000,000 rubles. The estimate of revenue is almost entirely chimerical, as it contains mass taxes like the levy on the bourgeoisie of October 31 last, which, instead of the 10,000,000,000 rubles entered in the July-December estimates, yielded 270,000,000 rubles net. Quite truthfully Ekonomitcheskaya Zhizn ascribes the vast deficit to the drying up of all sources of taxation. M. Demtchinski, a really competent financial writer who works for the Finance Commissariat, openly and somewhat incautiously ascribes this, as far as it concerns taxes, to the annihilation of private industry and the destruction of confidence. The report of the first half year's direct taxation receipts under Bolshevist régime, showed a very heavy deficit. The report for the second half year, July-December, 1918, which is only now available, shows that, as compared with JulyDecember, 1917, the receipts from the industrial tax declined 82 per cent, stamp duties by 74 per cent, duties on sales of personal estate by 96 per cent, on land sales by 93 per cent, and on industrial dividends by 89 per cent. The income tax yield nominally increased by several hundred thousand rubles. Owing, however, to the devaluation of the ruble and the enormous increase in the nominal national income, this really meant a heavy decrease.

In March the Commissariat of Finances issued an instructive circular as to methods of collecting income tax. The circular states that the assessment returns for the city of Moscow altogether reach only 11 per cent of the Commissariat's estimate of prob

able receipts. It does not attempt to conceal the fact that as the official estimates of the income of Moscow are certainly not unduly high, it must be concluded that about nine tenths of the income is dishonestly concealed from the taxpayers. Months ago the official Finansi Narodnoe Khozaistvo, which has since suspended publication owing to lack of paper, declared that only the two provinces, Orel and Saratoff, had regular corps of tax collectors, which worked efficiently and did not hesitate to throw tax shirkers into jail. Elsewhere direct tax collecting is practically left to chance or to the local soviets, which is a proceeding even less fruitful from the Central Government's standpoint.

For months past the Moscow and Petrograd Bolshevist newspapers have been publishing revelations as to the aberrations of these local soviets, which last year received subsidies of 650,000,000 rubles from the Commissariat, which are receiving this year, according to the Berlin Vremya, 1,155,000,000 rubles. They are, however, in chronic money difficulties. The revelations show that provincial soviets or their groups have both printed local money, sometimes called 'municipal,' sometimes 'territorial' (oblastniya), without the Finance Commissariat's authority; and unauthorized Central Government money printed from forged or stolen plates. They also raise forced loans, and impose forced levies on the bourgeoisie or on the whole population. When Commissary Krestinsky decreed his levy of ten billions on the bourgeoisie of all Soviet Russia, the provincial soviet of Kaluga imposed a local levy of four and a half millions, and collected it so thoroughly that the Central Government's tax collectors, who arrived. later, could collect only one million. The soviets have also arbitrarily es

tablished in several districts the State Drink Monopoly, abolished after the outbreak of the war; and they have, in defiance of Moscow, pocketed the proceeds. They have also established the system known as nagrada (reward), under which local magnates of sound Bolshevist tenets are allowed to collect taxes on the principles of the farmersgeneral of pre-revolutionary France. A great many other abuses are mentioned in the Bolshevist press. Their exact extent is, however, doubtful.

The general effect of local financing is to make central finance impossible except by the strenuous efforts of the printing machines at Petrograd and Penza. The local soviets do get in a certain small proportion of the paper issued by the Central Government; but to the Central Government there comes back hardly anything. It is notable, however, that the printers' journal, the Gazeta Petchatnikoff, publishes detailed figures to show that the monthly output of new credit notes is, contrary to general belief, not increasing. The monthly output of notes in 1918 is given as varying between 1,700,000,000 and 3,350,000,000 rubles. In December the output was only a little higher than in January. If these statistics are correct, the explanation may be found in the Bolshevist system, officially recommended last autumn, of payment with checks and in kind, and this system seems to have been tried with some success. It is equally likely that the statistics are

untrue.

As regards finance, the Bolshevist system very nearly fulfills predictions made by the former Finance Minister, M. Shingarioff, in Petrograd in April, 1917. The fatal facility of papermoney printing, he said, would force the Provisional Government to continue it until the country's finances were irretrievably ruined. This would

happen, no matter what government was in power. The prediction was fulfilled during the whole of the Lvoff and Kerensky administrations. It follows that among the Bolsheviki's numerous sins cannot be counted their paper finance, which was a damnosa hereditas received by the Provisional Government from the autocracy, and by it in turn handed on. The amazing feature is rather that the Bolshevist Government has kept afloat for nearly two years in a bark, which even under Kerensky was falling to bits.

The Morning Post

HIGH PRICES AND PROFITEERING: A BRITISH VIEW OF THE PROBLEM

POLITICAL economy has been so subordinated to doctrinaire propaganda that facts and principles which should be self-evident have to be stated as though they were revelations. This process is badly needed in connection with the present economic crisis. The nation is drifting into a mood of chronic exasperation with the increasing difficulties of living and is falling back upon the primitive device of finding a scapegoat upon whom to vent its ill-humor. In this instance the scapegoat is the 'profiteer.' Far be it from us to say a word in extenuation of the too numerous class of traders who have exploited this period of emergency to their own benefit. But to attribute the present evil of inflated prices solely to the greed of any particular section of the trading community is to show an ignorance of the elementary laws of supply and demand. In the present condition of popular feeling, therefore, truths cannot be made too clear.

There are three basic causes for the rise in prices the increased cost of production, the depreciation in the

purchasing value of money, and the universal scarcity of raw materials. For none of these conditions is the profiteer responsible. The situation has been aptly described as a vicious circle. Put another way, the very remedies employed to relieve the strain only serve to intensify the pressure. Of these remedies, the sensational but necessary advance in wages is the most prolific source of trouble. The cost of labor enters into each stage of production. Every addition to the remuneration of the worker is reflected in the transport of the raw material by sea and rail, in the loading and unloading, in the capital outlay on building and machinery, in the wage bill of the factory, in the delivery of the finished article, in the heavier expenses of the wholesaler and, in his turn, of the retailer. This snowball process of accumulating charges has to be met by someone in the end, unless business is to be conducted at a loss; and that someone has invariably to be the consumer. The workman will not toil for an insufficient wage, the employer will not give his time and money without some return, and the middleman and shopkeeper have to pay their way. Who shall say that they are battening upon the necessity of the people? Which class is profiteering-the workers, the employers, or the traders? They are all of them consumers as well as producers and distributors. They have to live and clothe themselves and meet rent and taxes at current rates. The more they ask and secure, the more they have to pay. There never was a plainer illustration of cause and effect.

There must, however, be a limit to the process, or the result will be paralysis. Money ceases to be a token of value when its purchasing power has no relation to the commodity in demand. Trade comes to a standstill

when production ceases to be economic. Housing is a case in point. There has been an acute house famine for the last two years. Half a million new habitations would barely meet the present requirements, but there is absolute stagnation in the building trade. The land is there, the bricks are there, and labor is plentiful. But nothing is being done. Local authorities decline to incur debts for the purchase of sites at uneconomic prices. Builders hesitate to embark on speculations which cannot be remunerative if rents are to approximate to the means of those for whom the houses are intended. Wages, material, and ground rents will not permit of buildings being erected at rentals which even the present earnings of small householders can afford. Meanwhile the dearth of houses is producing this very effect by reason of the strenuous competition for the available accommodation. And so the vicious circle goes on widening. If the average family is to make both ends meet, the income must be expanded; if the breadwinner is to earn more, the extra money he receives must be added to the cost of what he produces.

The other two cases interact as inexorably as the rise in the scale of wages. Money has never been so plentiful as during these lean years of war. But two 'Bradburys' do not suffice to purchase what a gold coin of the realm would cover in pre-war times. The national credit has come through an unprecedented ordeal with astonishing success, but it has been sadly battered. A state, however rich in natural and acquired wealth, cannot water its capital to the extent of £7,000,000,000, and create no fresh assets to cover depreciation, without losing much of its solvency. The pound sterling is at a heavy discount, as regards its purchasing capacity, however bounteous may

be the supply of its paper equivalent. And so when we gird at having to pay three guineas for a pair of boots that would have cost twenty-five shillings five years ago, we are merely deceiving ourselves by a conventional fiction: the cost of the boots has not really risen in that proportion intrinsically, but the exchange value of money has been shifted. It will not buy half as much as formerly. Moreover, there is not nearly so much to buy. Money is more plentiful than goods to purchase. The world's stocks have been steadily diminishing, while the labor of man has been diverted to the work of destruction. At a moment when every commodity is in demand for replacing wastage, there is a deficiency of supplies. And competition for any article which is scarce must of necessity send prices soaring. All Europe is wanting the same things at the same time, and each country is prepared to bid against the other for essentials. The only check upon this scramble is inability to pay for the goods.

Only one way out of the vicious circle lies open. The arrears of production must be overtaken by the concentrated effort of all classes. We must produce every requisite commodity on a scale never yet attempted: we must devise and establish new industries,

and encourage enterprise. The fallacy of limiting output in the interests of organized labor must be recognized as the straight path to national bankruptcy, and the old party fetishes of Free Trade and Protection must be rejected in favor of fiscal principles based solely on expediency. The maximum production, however, will not in itself be enough unless it is accompanied by reduction of expenditure. It is within the province of each individual to contribute toward the rehabilitation of the state finances by personal economy and even sacrifice. The consumer will play his part no less than the producer, if he will restrict his expenditure, as far as is feasible, to those things which his own country can provide, and will do without those things which go to swell the national indebtedness to the foreigner. The only real wealth is in production, for finally money is represented by goods for which markets can be found. The grim determination with which the British people saw the war to its end must be applied to the coming period of recuperation, and if the same measure of endurance and self-abnegation is forthcoming the economic struggle will have a like termination. But not otherwise.

The Outlook

TALK OF EUROPE

READERS may recall the gossip that used to be bandied about in the early years of the war concerning Mr. Asquith's social relations with a 'German spy.' Mr. Shortt, in a statement which did him credit, lately touched upon this case in Parliament. The famous 'spy' was a German woman, Caroline Hanemann by name, who in 1890 had entered the service of Mrs. Asquith's sister. She had never been in Downing Street except perhaps for a day or two in attendance on her mistress; she was never there as maid; her sponsors on naturalization were her mistress and a few Wiltshire gentlemen; and her denaturalization was not under the section which dealt with disaffection or disloyalty. Legitimate criticism of Mr. Asquith is one thing; innuendoes of this kind are quite another; and the House rightly showed its resentment of the suggestion or, rather, the plain statement in Mr. Billing's case that 'the late Prime Minister harbored a spy at 10 Downing Street.'

THERE is an amusing passage about Shakespeare and his actors in Mr. Maurice Baring's new volume of diminutive dramas. The actors, including the famous Burbage, behave most thoroughly in character, demanding opportunities, quarreling about words, suggesting cuts and alterations, getting the same lines wrong repeatedly.

Enter Mr. Burbage, who plays Macbeth Mr. Burbage: That scene does n't go. Now don't you think Macbeth had better walk in his sleep instead of Lady Macbeth?

The Stage Manager: That's an idea. The Producer: I think the whole scene might be cut. It's quite unnecessary.

Lady Macbeth: Then I shan't come on in the whole of the fifth act. If that scene's cut I shan't play at all.

The Stage Manager: We're thinking of transferring the scene to Macbeth. (To the Author). It would n't need much altering. Would you mind rewriting that

scene, Mr. Shakespeare? It would n't want much alteration. You'd have to change that line about Arabia. Instead of this 'little hand,' you might say, 'All the perfumes of Arabia will not sweeten this horny hand.' I'm not sure it is n't more effective.

The Author: I'm afraid it might get a laugh.

Mr. Burbage: Not if I play it.

The Author: I think it's more likely that Lady Macbeth would walk in her sleep. but

This little episode should go most beautifully as a curtain-raiser.

THE EMOTIONS OF A DEMOBILIZED
MAN

I Do not love this new civilian suit
Which o'er my boots effeminately flaps,
Nor close upon my neck with joy this band,
Stiff, pallid white, each day renewed, which
binds

Me thrall-like Gurth the Swineherd to the dull

Small round of petty life, for I have worn
Heroic khaki, and have tasted rum,
The drink of warriors. Rum that came at
dawn

After the night-long vigil in the trench,
While larks rose singing, and the gray-

faced men

Stared at each other in the growing light, And stamped their frozen feet, and said, 'By cripes

It's cold. I wonder when they 'll give stand down.'

No puny liquor spoiled by food control, But liquid fire that coursed along the veins, Fit drink for super-men. All that is passed.

One said romance brings up the 9.15. Where is that station? But a year agone Romance brought up all trains. It brooded

there

Where leave trains left Victoria. With the stroke

Of an enchanter's wand transmogrified

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