No. 114, p. 2560.]

Some of these debts may be written off at once, and that cheerfully,
seeing that they have been lent brothers-in-arms who have been
hit much harder than we have by the war, and had nothing like our
financial strength. The question is, what figure ought we to put on
this asset in deducting it from gross war expenditure in order to
arrive at a guess at the real cost? We take our loans to Dominions, of
course, as good to the last penny. Mr Bonar Law, in his Budget speech
last April, took our loans to Allies at half their face value. Strict
bookkeeping would probably demand a lower figure than 50 per cent.;
but let us follow the ex-Chancellor's example and take loans to
Allies, which we will estimate at L1480 millions up to November 9th,
as good for L740 millions, and loans to Dominions at L220 millions up
to the same date, a total of L960 millions, to be deducted from gross
war cost. Concerning L740 millions of this sum, however, there is a
certain amount of doubt. No one questions for a moment the solvency
of France and Italy, but in view of the pressure that the war has
exercised on their producing power, and, in the case of France, the
complication added by the uncertainties of the position in Russia, in
which French investors are so deeply interested, one cannot feel sure
that they will be able at once to make interest payments. Much will
depend on the sums that they are able to recover from Germany against
their bill of damages, on which more anon. But in any case it seems
likely that a general scheme of interest funding, as between the
Allies, may have to be adopted for some years to come.

As to the other assets that we have to set against our gross
expenditure during the fighting period, they were enumerated by the
Chancellor in his Budget speech last April in the following terms;--

Balances in agents' hands, debts
due, foodstuffs, etc L375 millions.
Land, securities, buildings and ships 97 "
Stores in Munitions Department
(cost price 325 millions) taken at 100 "
Additions this financial year 100 "
Arrears of taxation 500 "
---
Total[1] L1172

[Footnote 1: Parliamentary Debates, Vol. 105, No. 33, pp. 698-699.]

It will be remembered that in his Budget speech the Chancellor was
proceeding on the assump