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Greece with what it was while they were governed by Turkish Pachas, to
see what an immense boon to civilization it would be if Christian were
established for Mahometan rule in the remaining provinces. And it would
be the first step towards the establishment of a state of stable equilibrium
in the east of Europe, for while the "sick man " is dying by inches, all
sorts of interests are watching for his inheritance, each anxious either to
secure the lion's share for themselves or to prevent others from appropriat-
ing it.

At the same time there are great practical difficulties in the way of a
peaceabl solution, to appreciate which it is necessary to understand the
position of the principal parties interested. These are in the first place
Russia, Austria, the new Balkan States, and Greece ; and in a lesser
degree Germany, England, and Italy. The interest of Germany is almost
entirely Austrian. She cannot stand by and see a semi-German empire
like that of Austria dismembered, and the formidable power of Russia,


backed by Pan-Slavonic aspirations, preponderant over Eastern Europe
almost up to the gates of Vienna. And although Constantinople is the
back-door of Russia, it is also, to a considerable extent, the back-door of
Austria and Southern Germany. The interest of England and Italy is
almost exclusively confined to the question of Constantinople and the
Dardanelles. It would be dangerous for us and Italy in the Mediterra-
nean, if the Black Sea and Dardanelles were to become a sort of Russian
mare clausum, inaccessible without her permission to commerce, and from
which Russian fleets or privateers could issue as from an impregnable
fortress, where they could not be attacked in return.

As regards the minor states Roumania, Servia, Bulgaria, Greece, and
Montenegro though weak individually, they have all attained to a sepa-
rate and growing nationality, and together cover too wide an extent of
population and territory to be ignored. It is evidently a question of
influence and protectorate rather than of annexation in the case both of
these countries and of the remaining provinces of Turkey, which in the
natural course of events must sooner or later fall to them. Thus Old
Servia must gravitate towards Servia, Eastern Macedonia towards Bul-
garia, the Macedonian sea-coast, Epirus, Crete, and the islands towards
Greece, constituting in each case states large enough to be jealous of
their independence, and averse to being annexed as provinces either of
Russia or of Austria. But in the long run their leanings must be rather
towards Russia than Austria, both from affinities of race and religion, and
because the support of Russia is indispensable for them in order to obtain
the natural extension of their frontiers and the liberation of their brethren
who still remain under the chronic misgovernment of Turkey.

The solution of this problem must lie in the direction of a federation
of these Eastern Chirstian States, and such a neutralization as prevents
them from attacking one another, and from being used either as an out-
post of Russia to attack Austria, or as an outpost of Austria against
Russia to protract the agony of the Turkish Empire, and bar the way
against any advance of Russia towards Constantinople. Under such con-
ditions these new states might one and all disarm, and devote their ener-
gies to peaceful pursuits, instead of exhausting themselves by keeping up
large armies and foreign military princes.

But after all Constantinople remains the chief difficulty. Unless some
arrangement can be made respecting it, it must remain a constant source
of antagonism between Russia and Austria, and a permanent element of
unstable equilibrium in European politics. The prize is too valuable to
be appropriated unconditionally by any one of the parties interested,
except as the result of a great war which ended in the complete victory of
one of the claimants.

To understand this fully we must endeavor to place ourselves impar-
tially in the point of view of the principal parties. For Russia the ques-
tion of Constantinople is absolutely vital. It is so both from material


considerations, holding as it does the key of the back-door of her house,
and in hostile hands barring the commerce of the southern half of her
empire from its natural outlet, and enabling the enemy's fleets to enter
the Black Sea while Russian ships of war are blockaded in it. And it is
even more vital from the national and religious feelings of the entire
Russian nation. Russia is the one remaining country in which religion
still constitutes an important element in politics. The very phrase "Holy
Russia " denotes the feeling of the immense majority of the 100,000,000
of its population. Devotion to the Christianity of the Greek Church, and
to the Czar as its temporal representative, is the animating principle which
makes the Moujik die in the trenches of Sebastopol, or storm the
Balkan passes in the depths of winter. Add to this an hereditary hatred
of Turks, bred by centuries of contests with them and Tartars.

To these simple, devoted Russians a war with Turkey for the emanci-
pation of Christian races and places, is almost what a war with the infidel
for Jerusalem was to the early Crusaders. And Constantinople is their
Jerusalem, the cradle of their religion, the head-quarters of the orthodox
faith, the afflicted elder sister of their own Moscow. To place the Cross
above the Cresent on the dome of St. Sophia would be the dearest wish of
every Russian, and the Czar who succeeded in realizing it would be for
generations the object of almost divine veneration. The strength of this
feeling was shown only the other day, when sympathy with Servians fight-
ing against Turks attracted Russian volunteers of all classes, and finally
developed into such an irresistible current of public opinion as swept away
the Czar and his statesmen, and involved Russia in the last great war with

The fact is that Russian politicians may avail themselves of this feeling
for purposes of ambition, or restrain it for a time if the occasion does not
seem opportune, but they cannot control it. Whether we like it or not,
we must start with the fact that Russia will spend her last rouble and fight
her last man rather than allow any other Power to seize Constantinople,
or permanently bar the way towards it Also, that although she may be
content to remain passive and wait for a favorable opportunity, and for the
approaching dissolution of the Turkish Empire, to strike a blow, she will
not disarm, or allow any combination which might permanently debar
her from her share of the inheritance, while the Eastern question remains
in its present provisional state of unstable equilibrium.

This implies, that as long as the Eastern question remains unsettled,
Russia cannot allow France to be crushed, and thus leave herself without
an ally, in presence of Austria backed by Germany. And Russia can
afford to wait, for the course of events is tending steadily in her favor.
Catholic Austria, with her conflicting nationalities, cannot in the long run
compete for the protectorate or annexation of Eastern Christians of the
Slav race and Greek Church with orthodox Russia, with her population
of 100,000,000 of the same race and religion. Even a successful war


would only add to the embarrassments of Austria by introducing a still
larger Slavonic element into her empire, and making an equilibrium based
on the preponderance of the Magyars still more difficult; while Russia, on
the other hand, could keep whatever she got in the way of influence or
territory without endangering the unity of her empire.

The result, therefore, is that in the present state of European politics
disarmament is almost impossible, and the condition of precarious armed
peace and ever-increasing armaments must go on, until some accident
fires the match and it explodes in a great war. The only possible escape
would be, as already suggested, by a settlement of the Eastern question
at the expense of Turkey, in some way which would satisfy Russia with-
out unduly crippling Austria. A federation of the Greek Christian States
seems possible, as the first step towards a solution. Is any such solution
possible as regards Constantinople ? If nothing is done the course of
events will probably, sooner or later, and after one or more wars, solve
the problem by giving it to Russia.

A pacific settlement of the question of Constantinople would only be
possible on the basis of making it, with the Dardanelles, a sort of neutra-
lized and unharmed free city, open at all times to the commerce of the
world, but precluded from taking any part in war, or allowing itself to
be made a basis for hostile operations. This could be done either by
neutralizing the whole of the Black Sea, or by allowing ships of war
of all Powers to pass in or out, but not to remain within its limits, or
to engage in hostilities within a limited distance of its ingress or egress ;
making the Dardanelles, in effect, a sort of Suez Canal.

Constantinople itself would have to be made a sort of Metropolitan
city of the Greek Church, and its civil government vested in some council
in which the interests of the guaranteeing Powers were fairly represented.
The hereditary prince or president of such a council would have to be
some one acceptable to Russia and professing the Greek religion.

Whether such a solution would be possible it is difficult to say, but the
alternative seems to be a continuance of the present precarious state of
things, involving constant alarms and the maintenance of excessive arma-
ments, with the probable ultimate result of a still more complete protec-
torate or annexation by Russia. In fact the difficulties of any peaceful
solution are so great that it seems probable that Europe cannot arrive at
a state of stable equilibrium, making a general disarmament possible,
without passing through the crisis of a great war, to ascertain by the rude
test of the survival of the strongest, which conflicting interest has got
might on its side, and which being the weaker must go to the wall.
Some accident may precipitate such a crisis any day but it would be rash
to prophesy without knowing, and the outcome of the present state of
tension must be regulated to the " Problems of the Future."



HAVING been practically conversant with financial subjects for the
best part of half a century, I am naturally disposed to look at the
questions of the day a good deal from the point of view of financial policy
It is clear to me that we are approaching a grave crisis as regards this
policy. The necessity of placing the defences of the country in a state
in which we can contemplate the enormous armaments of foreign nations
and the menacing contingencies of European wars with tolerable security,
has become so apparent, that a very large expenditure is inevitable in order
to bring up the army and navy to a standard below which they never
should have been allowed to fall. This of itself necessitates a departure
from the principles on which Chancellors of the Exchequer have been
accustomed to frame Budgets, vis., to pare down estimates, pay off National
Debt, and, if possible, reduce taxation: in a word, to make immediate
popularity with the House of Commons and the country the primary con-
dition in the art of Budget-making.

It is evident that this is incompatible with the necessity of making large
and immediate expenditure on our armaments, and this of itself makes a
new departure in finance inevitable.

To make a new departure we must also take into account the growing
power of a vastly enlarged public opinion and electorate, which insists on
applying rules of common-sense and natural equity to all institutions and
all subjects of national policy, and will no longer be contented with
authority and tradition. Finance, being a subject which comes home to
every one in the unpleasant form of taxation, cannot escape from this
influence; and if the country is called upon to incur larger expenditure,
it will insist on two things: first, that it gets money's worth for its money;
and secondly, that the requisite taxation is levied fairly as between dif-
ferent classes.

Having thought much on these subjects, I have attempted, in the fol-
lowing article, to define some of the principle points which will have to
be considered, and to indicate the lines upon which Budgets, suited to
the altered circumstances of the times, will have to be framed. My con-
clusions may be right or wrong, but at any rate they are not those of a


mere amateur, but of one who has in his time prepared two Indian, and
assisted in preparing two English Budgets.

It has been said, " Give me a good foreign policy and I will give you
good finance." There is much truth in this saying, for our foreign policy
is responsible for a large portion of the national expenditure. Without
going back to the great wars of the last century, or the struggle against the
French Republic and Napoleon, respecting which opinions may differ,
and confining ourselves to recent history, we may affirm with confidence
that the Crimean, the Abyssinian, and the Afghan wars were diplomatic
wars, and that our expenditure in Egypt, the Soudan, and South Ai.ica is
to a great extent attributable to a vacillating and unwise foreign and
colonial policy. The surest test of the wisdom or unwisdom of a policy
is to ask ourselves whether, if we had to do the thing over again, we should
do it as it was done, or differently. Assuredly, in the cases above
mentioned, we should not do it as it was done; and it is within the mark
to say that at least 100,000,000 has been spent without necessity, with-
out result, and with a loss rather than a gain of reputation.

At the same time there is a reverse to the medal, and it may be asserted
with equal truth that bad finance often makes bad foreign policy. When
I say bad finance I mean bad in the sense of neglecting the cardinal
maxim that true economy is based on efficiency, and that a "penny-wise
and pound-foolish " policy succeeds no better with a State than with an
individual. Extravagance, rather than economy, is the certain result of
living in a condition oscillating between periodical panic and periodical

If we inquire what has been the cause of this state of things, the answer
must be that we have felt ourselves to be unprepared, and being unpre-
pared we have been nervous and afraid. Afraid of what ? Practically
there are only two Powers from whom any serious danger can be appre-
hended, Russia and France. The danger from Russia is remote, for she
could neither invade our shores nor contest our naval supremacy. It
resolves itself into the single apprehension that she might attack our
Indian Empire. Now as to this, it is by no means certain that Russia
would menace India if England abandoned the policy of bolstering up
Turkey and thwarting Russia at every point in Eastern Europe. The
Turkish rule in Europe is surely and speedily decaying, and the disposal
of the inheritance is very much more the affair of Austria and Germany
than of England. Any extension of the Russian Empire in this direction
would tend to diminish rather than increase the chances of her undertak-
ing a great war of aggression against India. But suppose the Russopho-
bists are right, and that Russia really does entertain such a project, what
is required to make our Indian frontier, humanly speaking, absolutely
secure ? Simply that we should be able to send there at a short notice
30,000 or 40,000 additional English troops fully equipped and ready for
immediate service. With such a reinforcement added to the English and


native armies already there, and the command of the frontier passes, no
one but an amateur strategist planning campaigns on small-scale maps,
can suppose that Russia would undertake such a tremendous enterprise
as that of sending an army hundreds of miles from its base, across the
rugged mountains and warlike tribes of Afghanistan, to attack us.

But the possibility of sending such a force in case of need to India is
a question of English finance, for we cannot throw the cost exclusively on
India without provoking widespread discontent, both by the sense of
injustice and by the pressure of additional taxation.

The Indian question is, however, only one branch of the much larger
question of the naval and military defence of the Empire. To feel secure,
we ought to be in a position where we can command the seas and repel
invasion from any probable enemy ? If it is asked, From what possible
or probable enemy ? the reply must be from France. France alone is
in a position to menace our shores with invasion, or to contest our naval
supremacy. It may be said that the interests of the two countries in pre-
serving peace are so identical, and the consequences of war to both
would be so disastrous, that a rupture between them is a remote contin-
gency. So it is, no doubt, as far as England is concerned, but unfortu-
nately the history of France leads to a different conclusion. The wars of
Louis XIV. and of Napoleon were wars opposed to the true interests of
France, and ended in disaster; but yet, in quite recent times, we have
seen France engaged in four wars the Crimean, the Italian, the Mexican
and the German, of each one of which it may be distinctly said that it
was a dynastic war, undertaken for no substantial object affecting the well-
being or safety of the French nation, but, on the contrary, involving a
certain heavy sacrifice of treasure and blood for no sufficient reason, and
with the net result of lowering the place of France in the scale of nations.
They were wars undertaken in defiance of common-sense, for the sole
purpose of consolidating the throne of a political adventurer.

What has happened once may happen again. Administration is so
centralized in France that whoever gets hold of the War and Foreign
Offices in Paris can plunge the nation into war almost without its know-
ing it and against its wish. The temptation to do so for a weak Govern-
ment is always great, for although the majority of sober and sensible men
and of rural electors might be opposed to war, there is always a turbulent
and restless minority in Paris, the large towns, and the Press, whose influ-
ence is more immediately felt, with whom any measure appealing to the
national Chauvinism and promising la gloire would for the moment be
popular. The strong feeling of patriotism also, which is one of the
honorable traits of the French character, would, for a time, induce all
parties to lay aside their differences and support the Government of the
day when once engaged in war.

There is always a danger, therefore, that under any form of government
the man or men at the head of affairs might, if driven to extremities,


follow the example of Louis Napoleon, and seek an escape from domestic
difficulties by involving the country in war. Nor is there any security
that if Germany and her allies seemed too stong to be attacked, England
might not be selected as affording a less dangerous antagonist The
interests of France and England are in contact at so many points in
Egypt, Madagascar, Newfoundland, and the Pacific that collisions fre-
quently arise which are smoothed over with difficulty, as in the case of the
New Hebrides, even when both Governments are sincerely desirous of
peace, and which would easily furnish pretexts for war if either Govern-
ment desired it.

The cardinal point, therefore, of English policy ought to be, while
doing all that is possible to maintain friendly relations with France, to
keep in view the possibility of a renewal of the old historical wars between
England and its restless and rival neighbor. To avert such a calamity
the same measures are needed as to protect ourselves from serious dan-
gers in case we are attacked. Our naval supremacy should be so assured
that there is no temptation to attack us, and our home defences such,
that the risk of invasion, in case some of the untried contingencies of
modern warfare gave the enemy a temporary command of the Channel, is
reduced to a minimum.

As regards the home defences the question resolves itself into a better
organization of the reserve forces, fortifying our principal ports and
arsenals, and an increase of the regular army. Above all, we want such
an organization as would insure us against surprise, and enable every man
and gun which appear on paper to find their place at once, and take the
field in a state of efficiency in case of any sudden emergency. As regards
the regular army, the best military authorities seem to agree that the two
army corps, of which we have often heard, in a state of immediate readi-
ness, either for home or foreign service, with proper transport, artillery,
and other appliances, are about what would be sufficient to give reasona-
ble security. Of these one is a question not of additional expense, but
of Irish policy. Without discussing the merits or demerits of this policy,
it is an obvious fact that as long as we maintain a policy hostile to a
great majority of the Irish race at home and abroad, we must support it
by a force of not less than 30,000 soldiers and 15,000 military police,
who, in case of war or apprehension of war, could not be withdrawn, and
are for all practical purposes non-existent for the defence of the Empire.

In addition to the two army corps there is no doubt that we require
more artillery and better organization for the Reserve, Militia, and Vol-
unteer forces, and stronger fortifications to protect our more important
arsenals and seaport towns against sudden attacks. All this costs money,
but after all the main question is to insure our naval supremacy. It is
evident that this is not the case at present We may be a little stronger
than France if the whole naval force of the two countries could be ar-
rayed against each other in a single engagement; but it is a question


whether we could command, at the same time, both the Channel and
the Mediterranean. Probably the command of the latter would depend
on the side which Italy took in the war, and our safety ought not to
depend on foreign alliances, which we shall be likely to gain if we are
strong and lose if we are weak. But in any case it is pretty clear that
with our present force we could not hope to maintain a permanently
efficient blockade of four or five ports at once, and prevent portions of the
French fleet and cruisers and privateers from escaping and inflicting im-
mense damage on our commerce, and possibly on our coast towns and
colonies. It is the most reckless extravagance to be remitting taxes and
paying off National Debt while this state of things continues.

Who is responsible for it ? The answer may seem to be paradoxical,
but it is nevertheless true: the fault lies mainly with the Treasury.

The Chancellor of the Exchequer is always a powerful, and often the
most powerful, member of the Cabinet, and his interests and preposses-
sions all lie in the direction of cutting down estimates and bringing in
popular Budgets. He is surrounded by officials whose business it is to
criticise all expenditure that admits of being cut down or postponed. It
is a useful and necessary function of Government, and ably discharged by
men of great intelligence and experience at the Treasury whose lives have
been devoted to it It requires a strong man as Chancellor of the Ex-
chequer to emancipate himself from this influence and take a large and
statesmenlike view of necessary expenditure. And it takes a still stronger
man to escape the temptation to earn for himself the character of a sound
financier, and for his Government and party a certain immediate popu-
larity, and to brave the attacks sure to be made upon him by ultra-econo-
mists and political opponents, for the sake of the ultimate and probably
remote results of a really national statesmanship. It is not a question of
party; the same influences effect Conservative as Liberal Governments;
and it has been reserved for the party which is nothing if not Imperialist,
to furnish some of the most recent and extreme instances of this sacrifice
of efficiency to economy, as in the reduction of the Horse Artillery.

There is a mischievous superstition at the Treasury, that the test of
a sound financier is to pay off the National Debt. This question of a

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