to work will be found to have enormously increased. So, also, will our total of tools (the term includes machinery and factories).

Therefore, given effective organisation, the country's annual outturn of wealth should be largely increased. The chief factor in extracting from workers and tools masses of useful products for consumption by the community or exchange for other products produced by other countries is the accordance of credit to the fullest extent to those capable of utilising it wisely and honestly.

One of the functions of banks is to regulate individual credit. For example, Farmer Brown is at the end of his monetary resources. He possesses the lease of a farm, the tools to cultivate it, the skill to direct cultivation.

The reasonable supposition is that, if his land be cultivated, the harvest will repay the effort expended in cultivation, and leave a handsome surplus of products. In this belief, Brown seeks from Turnpenny the banker, a loan wherewith he can purchase manure and seeds and pay labour till harvest-time. Turnpenny, convinced of Brown's integrity and ability and of the quality of his land, advances the money. Whether Turnpenny advances the money out of his own surplus funds, or borrows from Jack, Tom, and Harry, who trust him as he in turn trusts Brown, does not affect the aspect of the subject we are discussing at the moment. Brown obtains credit from Turnpenny on the basis of his (Brown's) personal integrity and in the belief of both men that God's law of seedtime and harvest will not fail. So long as the credit does not exceed the value of, say, 50 to 75 per

cent. of the worst harvest on record (barring absolute catastrophe), the embarking of Brown, Turnpenny, Jack, Tom, and Harry in this venture with Nature is reasonable, commendable, and justifiable from the national standpoint. Unless the necessary credit be forthcoming, the presumptive result to the nation will be:

(1) The land will stand idle. (2) Brown will stand idle.

(3) His labourers will stand idle.

.

This idleness will entail a far greater loss to the nation than that likely to ensue from a bad harvest. The accordance of credit, then, to the right people is a vital need of the country, and, if unobtainable through private banks, credit should be accorded by the Government.

The conversion of the increased masses of labour and increased masses of tools, confronting us at the end of the War, into increased masses of products, involves, therefore, the creation of increased masses of credit.

Therefore, the position of England as a commercial entity after the War will presumably be dependent on the skill with which the question of credit is handled by banks and the Government.

The industrial situation of Labour after the War should, on the whole, be improved.

One effect of military discipline should be to give the workers greater cohesion. With all its drawbacks, military discipline engenders a habit of self-control, a quality in which the working classes have been inferior to the upper classes, and which defect has lost them many a struggle.

The policy of the trade unions should be to open their ranks freely to the skilled or semi-skilled men who have learnt their trade other than by the orthodox means of "serving their time." The unions should aim at securing a monopoly of labour within their trade, so as to destroy the danger of competition from skilled or semi-skilled blackleg labour outside the unions. If the policy outlined be boldly and intelligently followed, Labour should have the advantage over Capital in case of disputes.

(c) The replacement of material possessions destroyed by the War, and the development of industry possible from the masses of labour and masses of tools alluded to earlier, should allow of the profitable employment of capital-which is frequently another development of credit.

But much will depend on Government action. Capital tends to flow where the return will be largest to the capitalist, not to the nation. During the War, the nation has restricted the outflow of capital, and the nation has benefited accordingly. The truth that the tariff reformers hold (though mingled with much more of error) is this, that the greatest return to the capitalist is not necessarily the greatest return to the nation. The return on capital is both direct and indirect. Let capital return directly 5 per cent. to the capitalist, plus 3 per cent. more indirectly to the nation (in all, 8 per cent. to the nation). If, by investment abroad, capital return directly 6 per cent. to the capitalist, and indirectly I per cent. to the country, the direct gain to the capitalist of 1 per cent., which leads to his investing abroad instead of at home, involves a direct loss to the country of 2 per cent.

This theory carries a corollary. If the capitalist be compelled by special legislation to keep capital at home at 5 per cent. when he could invest abroad at 6, then the Government is robbing the capitalist of I per cent. for the benefit of the community. On the other hand, if the capitalist under a tariff, or through other special legislation, is allowed to reap 7 per cent. at home, when he could only get 6 per cent. abroad, then the Government is robbing the community of 1 per cent. for the benefit of the capitalist.

The future of capital will largely depend upon the action of Government-the continuance of existing restrictions and the nature of future regulations.

The demand for capital should be keen, and rates high.

I find I have, without deliberate intention, incidentally answered question No. 2, as to the best policy for Labour. The policy of the State should be:

(1) The wise furtherance of credit, either through the banks or through special local associations.

(2) Insistence on the capital accounts of joint stock enterprises being adjusted on sound and scientific lines, showing the real earnings of capital; and

(3) In any attempts made to regulate commerce, to follow the policy of ruling through trade associations and trade unions, whose executives should be freely elected by the members of both, with provision for the periodical introduction of fresh blood to prevent fossilisation.

There is at all times and under all circumstances only one policy for capital and capitalists. It is, "Look out for No. 1." In so far as they depart from this principle (which, be it said to their credit as citizens,

they often do), they are bad capitalists, though good citizens.

The policy of a capitalist is—other things equal-to employ his capital so as to yield him the biggest return. The manner in which he may employ his capital is not his affair, but that of the State.

(e) STATISTICAL

PROFESSOR A. L. BOWLEY, Sc.D., F.S.S., F.E.S. (London University)

(1) (a) It is not improbable that employment will in general be good, but real wages are likely to be lower than before the War.

(1) (b) The owners of capital goods will be in an advantageous position.

(1) (c) I do not think that the nation is a single entity commercially. It will be easy for merchants to sell goods to other countries, owing to the debt to (or diminished credit with) the United States.

(2) (a) The immediate interests of different classes of labour are so distinct-i.e., those of men and women, skilled and unskilled, miners and others—that one should not speak of the interests of Labour as a whole. Possibly the question means, "What policy of Labour would best serve the citizens of the State as a whole ? In that case I think that the answer is, that policy which maximises production without detriment to the well-being of the worker; but it is doubtful whether or not production and well-being are antagonistic.

(2) (b) I have no answer to the question, partly