The Chancellor of the Exchequer began by pointing out that his forecast of 1913 had been more than justified (A.R., 1913, p. 102). Trade had reached its highest point, unemployment its lowest, and hardly any other country had had a like experience. He had estimated an increased revenue of 6,000,000_l._; the increase had been unprecedented--9,441,000_l._ He had had, however, to meet Supplementary Estimates of 3,371,000_l._, against which were set savings in various departments of 1,500,000_l._ The deficiency he had to face was 1,860,000_l._ The increase of revenue enabled him to pay the Supplementary Estimates, wipe out the deficit, leave the 1,000,000_l._ which he had proposed to take from the Exchequer balances, and end with a surplus of 750,000_l._ The new taxes of 1909 had yielded 27,215,000_l._, the national income had increased since that year by 140 to 150 millions, and the national savings by 1,750,000,000_l._ The revenue from these taxes had sufficed for all their proposed aims except the relief of local taxation, and, but for increased naval expenditure, it would have sufficed for that likewise. In the current year the estimated expenditure was increased by 8,492,000_l._ and the conditions of revenue were very difficult to forecast. The total estimated revenue from existing sources was 200,655,000_l._, the total expenditure, apart from the new projects, 205,985,000_l._, leaving a deficit of 5,330,000_l._ But the readjustment of the relations of Imperial and local finance had long been imperative. He referred to the Commission which reported in 1901, and to the pledge of the Government in 1908 (A.R., 1908, p. 42). Local authorities had immensely wide functions, but inadequate means; Parliament for forty years had almost annually imposed new powers on them, making hardly any provision to meet the cost. Rates in some districts had doubled in twenty or thirty years; slums could not be cleared because the cost was prohibitive (though this was not altogether a question of rates), and education demanded assistance. The existing system of rating was indefensible, discouraging improvements and very unequal in its incidence. A workman in a town paid about 5 per cent. of his income in rates, a supertax payer 1 or 2 per cent., a tradesman 9 and (in London) 13 per cent. The basis of taxation was too narrow, and the system of assigned revenues and of the Agricultural Rating Act had failed. Further and substantial aid from the Exchequer was necessary to save the municipalities from bankruptcy; but mere subsidies without conditions would be pernicious. There should be a national system of valuation for local taxation, involving the taxation of site values; the machinery for this existed already, and the effect would be to relieve owners who had spent heavily on improvements; but there must be a time-limit, or one might go back to the Roman period. The distribution of relief would give the