"Critics Must Face Facts"

The Big Five of the Labor Cabinet met at No. 10 Downing St. last week wryly determined to swallow a bitter pill. They were Prime Minister Ramsay Mac-Donald, Chancellor of the Exchequer Philip Snowden, Foreign Secretary Arthur Henderson, Secretary of State for the Dominions James Thomas, President of the Board of Trade William Graham. Their bitter pill was the report on national economy presented more than three weeks ago by Sir George Ernest May.

Britain's budget next year may be top-heavy to the extent of some $583,000,000 if drastic economies are not put into force. Congress has prepared to assume a $903,000,000 deficit for the U. S. this year, but Britain does things differently. It is one of Britain's greatest traditions that the budget must balance.

If Sir George May were a politician he would know that this is a poor year to talk to British voters of budget retrenchments. But he is no vote-monger; he is an able financier, an insurance man. In the report which his committee presented was the blunt warning: "The nation cannot go on borrowing to meet its current requirements." He urged a budget slash of $469,370,000. Labor's Big Five studied the May report sourly last week, looking for some economies which could be put in force without costing political necks.

Opposition leaders were willing to help. Liberal David Lloyd George was still sick abed, but exact reports of what went on at the Labor councils were carried to his bedside. Conservative Leader Stanley Baldwin left Aix-les-Bains, rushed back from vacation to confer mightily with Scot MacDonald.

No formal announcements were made, but the London grapevine carried fairly reliable accounts of what the Labor leaders were proposing. The May report suggested, among other things, a drastic trimming of military, school and police salary budgets, and a 20% reduction in the Dole. Any tinkering of the Dole would be suicide for the Laborites, might be more than even the Conservatives could tackle. Commented Economist John Maynard Keynes in The New Statesman & Nation:

"Salary and dole reductions would merely aggravate the present situation by adding between 250,000 and 400,000 to the total of unemployed, and would produce a net reduction of only -L-50,000,000 instead of the estimated -L-120,000.000 deficit in the budget." Next suggestion was a program of Equal Sacrifices for All. All fixed income-bearing investments including municipal bonds were to be taxed 1%. As a "patriotic loan" the 5% Government War loan bonds were to be converted to 4% or 4 1/2%. The total thus saved would be matched by an equivalent cut in Government salaries. There was another rumor. Scot Mac-Donald had an important conference with King George's assistant private secretary, Sir Clive Wigram. It was rumored that a cut in King George's privy purse allowance, which has remained at some $550,000 per year since 1910, was being considered.* Other reported cuts: $2,375,000 from the grant to the British Broadcasting Co.; $30,000,000 by halting roadbuilding.

Leaving London, Prime Minister Mac-Donald went to resume his interrupted vacation in Lossiemouth. Secretary of State Stimson was also in Scotland last week, theoretically shooting grouse at Rogart. British papers refused to believe that the two were not planning secret conferences on the subject of war debt reductions. From Lossiemouth word came that Prime Minister MacDonald was planning an emergency session of Parliament to rush through economy bills. To reporters he had only this to say: ''My message to the nation is, to be steady and don't listen to panicky talk. . . . There must be cuts in the national expenditure, supplemented by extra burdens for those best able to bear them. But both the cuts and the burdens will be reduced to the barest possible minimum consistent with balancing the budget. . . . "I ask the members of the Labor party to remember that we are grappling with the situation with all our ideals unaltered. ... Of course there will be critics and we already know the speeches they will deliver, but critics like everybody else must face facts. . . ."

*lt is impossible to report King George's exact income. Besides the privy purse income he receives about $300,000 yearly in revenues from the Duchy of Lancaster. There are in addition his private investments, said to include much New York real estate.

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