afterwards addressed a great meeting and told the 300 millions of the Moslem world to look upon him as their true and only friend. The principal instrument of this policy was to be the Baghdad Railway. He had been unable to understand the curious penchant of some politicians in both parties for that scheme, and he believed that every word uttered by those who, like himself, were suspicious of the scheme had been amply justified by what had passed. The plan was a bold one, but it was by no means completed, and it would not be completed until the Conference had met at the end of the war. In its various manifestations it was well thought out, and agents were on the spot, plentifully supplied with instructions issued to them by Germany." (House of Lords, February 20th, 1917.)

Calling attention to the German scheme in operation in Persia during the last twelve months, Lord Curzon pointed out that that country was one of the principal Asiatic pieces on the board. He

continued:-
:-

"The Consuls of the Central Powers at Ispahan and other large towns were well organised, and use was made of a considerable number of German and Austrian prisoners who had escaped from captivity in Russian territory. They had a number of machine-guns and probably a large consignment of rifles. At one time there were quite one hundred of these German bands scattered about in different parts of Persia, terrorising peaceful tribes and also offering bribes. They found help from some of the Swedish gendarmerie, who might be regarded as Germans under the thinnest of disguises. They stirred up trouble with the tribes who were habitually at peace with the Central Government. Of all such people the German agitators and agents made friends, and they carried on the operations in the neighbourhood of the British-Indian border. Meanwhile Germany succeeded in getting another and more powerful ally. The Turks, intending to pay off old scores against their hereditary enemy, and anxious to recover territory on the borders of Persia and Turkey, penetrated into Persia and overran part of it, and the Turkish army was still there. Then stories were spread everywhere that the German Emperor had embraced the creed of Islam. The movement reached its maximum force in August last. The Turkish military advance was exercising so disastrous an influence on the situation in Teheran at that time that the Persian Government was on the eve of evacuating the capital. Since then there had been not merely a sensible alleviation but a steady improvement in the conditions. The Russian army had recovered its position and effectively barred the way of the Turkish forces to Teheran. In that manner the Russian force had rendered great service to the Allied cause, and we found ourselves in the somewhat strange and anomalous position of having the Russian army acting as a successful screen of defence to our Indian Empire. The British Consul at Shiraz and the few male members of the community there who were imprisoned with him had been released after eight months of harsh captivity. Most of the German agents in the country had been captured, and he hoped that before long the few who were still at large would be taken. The harm that a single evil-minded European, plentifully provided with money, could do in a country like Persia was almost incredible, and not until all of the German agents were captured could the situation be cleared."-(House of Lords, February 20th, 1917.)

Lord Curzon described the successful operations, conducted by Sir Percy Sykes, which resulted in establishing order over a wide

area and, in Teheran itself, secured the existence of a Government friendly to the Allied Powers. Incidentally, he spoke of the loyalty of the Ameer of Afghanistan, who "in spite of solicitations and the offer of bribes, had, as far as was known, remained entirely loyal to his obligations to Great Britain, and had declined to be seduced from that loyalty by the tempting offer of the spoil of the Punjab.”

To-day, the situation, Lord Curzon added, was not altogether free from anxiety. Turkish troops had still to be turned out of parts of Persia, and in the hinterland of the Persian Gulf there was still disorder. The position of the oilfields was practically secure, and he had not heard for many months past of any interruption of communications in that region. No one who knew anything about the East cared to venture to prophesy about it; but he hoped that it might be said that the worst was over, and that the great chain of ambition and aggrandisement stretching from Europe to Asia had been twisted aside, if it had not been broken.

BRITISH THANKS

TO THE

U.S. EMBASSY.

When diplomatic relations between the United States and Germany were broken off, and the charge of British interests in Germany transferred to the Netherlands Minister at Berlin, our Government was prompt to express the thanks of the nation to the diplomatic representatives of the U.S.-and especially to Mr. Gerard-for their labours on behalf of British civilians and prisoners of war. thanks were expressed in a letter from Mr. Balfour to Mr. Page (the U.S. Ambassador in London). Mr. Balfour, after referring to the immense amount of work which the care of British interests had necessarily entailed upon the staffs of the U.S. Embassies in London and Berlin, went on to say:

"

The

"His Majesty's Government are especially grateful for all that has been done by the United States Diplomatic and Consular officers in Germany for the British prisoners of war. There can be no doubt that their efforts have been the direct cause of a considerable improvement in the treatment of British prisoners, while the machinery devised for relief has, as far as possible, ameliorated the lot of those British subjects who, though not interned, have, for various reasons, been unable to leave Germany. His Majesty's Government fully realise that these results have not been achieved without much labour on the part of the American officials concerned, and, in some cases, in face of strenuous opposition on the part of the German authorities, and I can assure your Excellency that the work done by the representatives of the United States of America on behalf of British subjects in hostile hands will not readily be forgotten either by his Majesty's Government or by the British people."

Mr. Page was asked to accept personally, and to convey to the members of his staff, this expression of the most cordial thanks of his Majesty's Government, and also to be so good as to ask his Government to express to Mr. Gerard his Majesty's profound gratitude and recognition of deep indebtedness to him and to his Excellency's staff.

II. THE THOUSAND MILLIONS WAR LOAN. The Great War Loan floated in January (see MAGAZINE for February, at page 31) was a success beyond all anticipations. Mr. Bonar Law announced the result in the House of Commons on February 26th, and said the total reached a figure which, even a week earlier (with knowledge of the measure of the Loan's success) he should have considered altogether impossible to be reached. The applications through the Bank of Bank of England amounted to £819,586,000. The amount of Treasury Bills converted was £130,711,950. Applications through the Post Office represented £30,715,000. The amount received during the currency of the applications for the Loan through War Savings Certificates was £19,300,000. This made a new money total of £1,000,312,950. Of the amount applied for only about £22,000,000 was the tax-free Loan, and the rest was in the Five per Cent. Loan in the ordinary way. In addition to these amounts, the Treasury received gifts from 444 individuals amounting to £60,000, and from 87 other individuals were received loans, free of interest, amounting to £196,000. These amounts do not go directly into the Loan, but they are in addition to it, and they amount to £250,000. Besides that, the Treasury received promises to return interest from 25 individuals amounting to £13,000 a year during the war.

Comparing the Loan (the third of the series) with previous War Loans, Mr. Bonar Law pointed out that the new money subscribed exceeded the amount of the two previous Loans taken together. The Loan of 1915 was a great success. It amounted to £616,000,000, but of that sum £200,000,000 was subscribed directly by the banks. The banks were ready to give similar support for the new Loan, but it had not been found necessary to appeal to them for their assistance in this way.

Comparing the figures of the new Loan with German Loans, Mr. Bonar Law pointed out that German Loans had successively become smaller, while the British Loans had increased enormously. The amount raised by the last German Loan was £532,000,000; their biggest Loan-the third-was £608,000,000, a figure surpassed by the new British Loan by nearly £400,000,000. The subscribers to the British Loan in 1915 numbered 1,100,000. The subscribers to the new Loan, taking into account-as the Germans do-all the applications for small amounts (e.g., War Savings Certificates), numbered not less than 8,000,000. The number of subscribers to the fourth German Loan was 5,280,000, and to the fifth German Loan 3,810,000 again showing a falling off in the latest Loan as compared with the previous Loan.

Mr. Bonar Law spoke of the enthusiasm and widespread nature of the application for the new Loan as an expression of the will of the people of this country to win the war,' ," and he described the result of the Loan as "evidence of the financial ability of this country to see the war to a successful conclusion."

III. RESTRICTED IMPORTS AND STIMULATED AGRICULTURE.

The Prime Minister made a highly important speech in the House of Commons on February 23rd in explanation of the Government's plans for meeting the shortage of shipping, the schemes involving a drastic restriction of imports, and wide reaching proposals for the development of home production.

The Tonnage Difficulties.

Mr. Lloyd George, at the outset of his speech, referred to the tonnage difficulties, and in this connection he said:

"The ultimate success of the Allied cause depends, in my judgment, on our solving the tonnage difficulties with which we are confronted. Before the war our shipping tonnage was only just adequate. There was a very large shipbuilding programme, but it was, to a very considerable extent, suspended after the war, owing to the essential activities of the Navy. Since the war began there have been enormous increases in the demands upon our tonnage. There is transport for the Navy, transport for the Army, for our expeditions in France and in Eastern waters. Our Allies have made very considerable demands upon British tonnage. Over a million tons of our shipping has been allocated to France alone. There is a very considerable tonnage set aside for Russia and also for Italy, and the balance left for the ordinary needs of the nation, after providing for these war exigencies, is only about half the whole of our tonnage." (House of Commons, February 23rd, 1917.) The Prime Minister pointed out that while the shipbuilding capacity of this country had been considerably limited by the greatly increased demands for building for the Navy, there had been a very considerable tonnage sunk by submarines, that ratio having increased very materially of late. There had been for some time a shortage for the ordinary needs of the nation, and even a certain shortage for the military exigencies of our Allies and ourselves. The existing state of affairs was undoubtedly one that called for the gravest measures to deal with the problem. Mr. Lloyd George added on this point:

"If we take it in hand, and take it in hand at once, and take very drastic measures, we can cope with that peril. If we do not, I am not going to withhold from the House the fact that if the nation is not prepared to accept drastic measures for dealing with the submarine peril, there is disaster in front of us. I am here, with all the responsibility of a Minister of the Crown, to tell the House and the nation that fact. The Government are proposing measures, we mean to propose measures, which we think will be adequate; but it does mean enormous sacrifices on the part of every class in the community, and the national grit is going to be tested by the answer that is going to be given to the statement I make to-day on behalf of the Government."-(House of Commons, February 23rd, 1917.)

Reminding the House that very nearly half of our tonnage is engaged in war work, the Prime Minister explained that whereas in the twelve months before the war about 50,000,000 of tonnage

entered British ports, that had been reduced during the last twelve months to 30,000,000 tons. That was not submarine work, but was almost exclusively attributable to the fact that a very large proportion of our tonnage had been allocated to our Allies. Announcing that the Government were hopeful of finding means of dealing effectually with the German submarines, Mr. Lloyd George declared that they would be guilty of criminal folly if they rested their action or their policy on a tranquil anticipation of being able to realise that hope. They must be able to carry the war through to a victorious end, however long victory might tarry, even though they failed to hunt the submarine out of the deep. There was no sure foundation for victory except that.

Measures for Dealing with the Shortage.

The Prime Minister followed this warning by explaining that the measures proposed by the Government for dealing with the shortage involved great sacrifices on the part of the community. Those measures were divided into three categories. First came the measures to be adopted by the Navy for grappling with the menace; the second measure was the building of merchant ships wherever they could get them; the third was to limit our needs for oversea transport by dispensing with all non-essential commodities now being brought from over the seas and by producing as much of the essentials of life as we can at home. In regard to shipbuilding, he said the output could be very considerably increased by an alteration of methods, and he advocated payment by results, which would involve an undertaking on the part of employers that if large wages were made by men as a result of special effort, no advantage must be taken of that to reduce the rates. In the main the shipbuilding burden was on the shoulders of Britain, and if workmen and employers strove to do their utmost, he believed Great Britain could bear that burden successfully to the end.

Home Production.

Proceeding to the subject of home production, the Prime Minister first dealt with timber, of which we imported 6,400,000 tons last year, a figure which did not include what was taken direct from France. Of that 2,000,000 were pit-props for the collieries, and the bulk of the remainder was used for the military forces here and in France. It was suggested that a good deal might be saved by economy in the use of timber; but they must also secure forests in France, and so develop home supplies as to make the country selfsupporting during the war in timber. After stating that a large amount of labour would be requisite for that, Mr. Lloyd George said the next heaviest item was iron ore. There was plenty in this country; but the necessary increase of the number of blast furnaces meant more labour for building and carrying on the work. Turning next to the home production of food, the Prime Minister said :