Nelson's history of the war. Vol. XI., The struggle for the Dvina, and the great invasion of Serbia

THE POLITICAL SITUATION. 75

was restrictive as well as revenue-producing, in order to lower our imports from abroad of non-essential commodities. An Excess Profits tax of 50 per cent. was imposed on all business profits made during the war, excess profits being defined as those in excess of an average of recent years, allowances being made for any extra capital employed. Post office charges were increased, but the rigour of the first proposals was slightly abated. These most substantial imposts, which bore very heavily on the middle and professional classes, were accepted without murmuring, even with alacrity, by the nation. “It has been my duty,” said the Chancellor of the Exchequer, ‘ to ask the country to assent to taxes on a gigantic scale. Surely it must have been a subject of congratulation to every member of the House that the country has accepted these burdens with almost unanimous willingness, and it is without precedent in a great war of any country that the nation has come forward and literally asked to be taxed.”

Far more complex, and at the same time far more urgent, was the question of how to pay for our foreign imports. In the case of an importing country like Britain there is usually an excess of imports over the value of her exports. This balance is normally liquidated partly by our earnings from freights, partly from our banking commissions, and partly from the interest on foreign securities in British hands. In time of war it was obvious that the first two sources would greatly decline, since so much of our mercantile marine was being used for war purposes, and since the usual financial activity of the London market was restricted. More-