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wrecking their nations. Kings have always been uncertain pay. Not many loaned money to them willingly and only in small amounts and at usurious rates of interest. To float a "patriotic loan," it was often necessary to make use of the prison or the rack. With the advent of parliaments and chambers of deputies, the credit of nations improved and it became easy to borrow money. There was developed a special class of financiers, the Rothschilds at their head, pawnbrokers rather than bankers, men able and willing to take a whole nation into pawn. And with the advent of great loans, as Goldwin Smith wisely observed, "there was removed the last check on war." With better social and business adjustments, and especially with the progress of railways and steam navigation with other applications of science to personal and national interests, the process of borrowing became easier, as also the payment of interest on which borrowing depends. Hence more borrowing, always the easiest solution of any financial complication or embarrassment. Through the substitution of regular methods of taxation for the collection of tribute, the nations became solidified. Only a solidified nation can borrow money. The loose and lawless regions called Kingdoms and Empires under feudalism were not nations at all. A nation is a region in which the people are normally at peace among themselves. In civil war, a nation's existence may be dissolved. In all the ages war costs all that it can. All that can be extorted or borrowed is cast into the melting pot, for the sake of self-preservation or for the sake of victory. If the nations had any more to give war would demand it. The king could extort, but there are limits to extortion. The nation could borrow, and to borrowing there is but one limit, that of actual exhaustion. Mr. H. Bell, cashier of Lloyd's Bank in London, said in 1913: 'The London bankers are not lending on the continent any more. We can see already the handwriting on the wall and that spells REPUDIATION. The people of Europe will say: "We know that we have had all this money and that we ought to pay interest on it. But we must live; and we can not live and pay."' The chief motive for borrowing on the part of every nation has been war or preparation for war. If it were not for war no nation on earth need ever have borrowed a dollar. If provinces and municipalities could use all the taxes their people pay, for purposes of peace, they could pay off all their debts and start free. In Europe, for the last hundred years, in time of so-called peace, nations have paid more for war than for anything else. It is not strange therefore that this armed peace has "found its verification in war." It has been the "Dry War," the "Race for the Abyss," which the gray old strategists of the general staff have brought to final culmination. The debt of Great Britain began with the revolution of 1869, with about $1,250,000. This unpopular move, known as Dutch finance, was the work of William of Orange. Other loans followed, based on customs duties with "taxes on bachelors, widows, marriages and funerals," and the profits on lotteries. At the end of the war of the revolution the debt reached $1,250,000,000, and with the gigantic borrowings of Pitt, in the interest of the overthrow of Napoleon, the debt reached its highest point, $4,430,000,000. The savings of peace duly reduced this debt, but the Boer war, for which about $800,000,000 was borrowed, swept these savings away. When the present war began the national debt had been reduced to a little less than $400,000,000 which sum a year of world war has brought up to $10,000,000,000. The debt of France dates from the French Revolution. Through reckless management it soon rose to $700,000,000, which sum was cut by paper money, confiscation and other repudiations to $160,000,000. This process of easing the government at the expense of the people spread consternation and bankruptcy far and wide. A great program of public expenditure following the costly war and its soon repaid indemnity raised the debt of France to over $6,000,000,000. The interest alone amounted to nearly $1,000,000,000. A year of the present war has brought this debt to the unheard of figure of about $11,000,000,000. Thus nearly two million bondholders and their families in and out of France have become annual pensioners on the public purse, in addition to all the pensioners produced by war. Germany is still a very young nation and as an empire more thrifty than her largest state. The imperial debt was in 1908 a little over $1,000,000,000. The total debt of the empire and the states combined was about $4,000,000,000 at the outbreak of the war. It is now stated at about $9,000,000,000, a large part of the increase being in the form of "patriotic" loans from helpless corporations. The small debt of the United States rose after the Civil War to $2,773,000,000. It has been reduced to about $915,000,000, proportionately less than in any other civilized nation. The local debts of states and municipalities in this and other countries are, however, very large and are steadily rising. As Mr. E. S. Martin observes, 'We have long since passed the simple stage of living beyond our incomes. We are engaged in living beyond the incomes of generations to come.' Let me illustrate by a supposititious example. A nation has an expenditure of $100,000,000 a year. It raises the sum by taxation of some sort and thus lives within its means. But $100,000,000 is the interest on a much larger sum, let us say $2,500,000,000. If instead of paying out a hundred million year by year for expenses, we capitalize it, we may have immediately at hand a sum twenty-five times as great. The interest on this sum is the same as the annual expense account. Let us then borrow $2,500,000,000 on which the interest charges are $100,000,000 a year. But while paying these charges the nation has the principal to live on for a generation. Half of it will meet current expenses for a dozen years, and the other half is at once available for public purposes, for dockyards, for wharves, for fortresses, for public buildings and, above all, for the ever-growing demands of military conscription and of naval power. Meanwhile the nation is not standing still. In

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