with the Church; she is fulfilling her mission; ever, as of old, will glad welcome greet the footsteps of him that bringeth good tidings, that publisheth peace." [7] FOOTNOTES: [Footnote 7: The word "Church" is used in the sense which each reader chooses to attach to it. Definition in such matters leads to dissension.] Part III RETRENCHMENT CHAPTER XIV STATE EXPENDITURE AND INCOME _Political economy, as a branch of the science of a statesman or legislator, proposes two distinct objects, first, to provide plentiful revenue or subsistence for the people or, more properly, to enable them to provide such a revenue or subsistence for themselves, and, secondly, to supply the slate or commonwealth with a revenue sufficient for the public services._--ADAM SMITH. Taking first the second of the two objects mentioned by Adam Smith, it will be convenient under the heading of "Retrenchment" to treat not only the question of economy in the expenditure of the State, but also the other side of the account, and consider what general lines of action should be adopted to make revenue balance expenditure, in the first place by reducing expenditure, and, in the second, by increasing revenue, in view of the fact that the absolutely necessary expenditure will be enormously enhanced to meet the interest on the National Debt. Assuming that the War were to end in the spring of 1919, the debt will probably amount to about seven thousand millions after allowing for loans due from the Allies and Dominions so far as they are likely to be then recoverable. Taking interest at 5 per cent. with a sinking fund of only half per cent., it is estimated that the permanent annual charge in respect of the Debt will then be about 380 millions. No doubt part of the Debt bears interest at a lower rate than 5 per cent., but a portion has been borrowed at a higher. This is on the assumption that the War will end within this financial year. Even if the War does end within the financial year, much of the expenditure occasioned by it must go on during the period of demobilisation, and during part of that period the Debt will probably go on growing, as it can hardly be expected that sufficient revenue can be raised by taxation to meet this continued expenditure directly due to the War. There will also be for many years to come a very heavy expenditure on pensions, and, whatever other savings may be effected, the duty of providing pensions for injured and disabled sailors and soldiers is paramount, and the provision must be made generously.