would make the inquiry; preparations were also being made for a census of production. Unlike Mr. Lloyd George, he was not afraid of Germany doing more trade and becoming more prosperous, but he agreed that England should put her own house in order by improving her equipment, as so many foreign countries had done since the war.

On June 23 Mr. Wheatley moved the second reading of the Housing Bill which in the guise of a financial resolution had already been discussed by the House a few weeks earlier. The essentials of the Bill, he said, were a treaty with the building industry, a treaty with the local authorities, and a charter for the tenant. Parliament was asked to guarantee financial support for fifteen years towards the erection of houses in order to enable the building industry to extend its resources in men, materials, and finance, and so become once more a powerful pillar of the nation. The industry, on the other hand, undertook to provide houses in certain numbers and at reasonable prices. The Government, Mr. Wheatley held, had done everything short of nationalisation to ensure the production in abundance of necessary materials, while every provision had been made for keeping costs down. This was not the opinion of the Conservative Party, which moved the rejection of the Bill on the ground that it did not meet the difficulties either as regards labour or materials, that it discouraged private enterprise and ownership, and threw an excessive burden on the State and the local authorities. The Liberals liked the bill hardly more than the Conservatives, but as they had no better scheme of their own for producing working-class houses, they did not judge it a suitable issue on which to turn the Government out. Most of them accordingly voted against the Conservative amendment, which was defeated by 269 votes to 206. They moved, however, that the Bill should be committed not to a Standing Committee, but to a Committee of the whole House, so that they could introduce amendments, and this was carried against the Government by 315 votes to 175.

The Government's Finance Bill, being free from all taint of Socialism, had a fairly easy and rapid passage through the House of Commons. On one point, however, it gave the Government a nasty fall. The Liberals moved that the entertainment tax should not be levied on shows given for educational and philanthropic purposes, and carried their point in the teeth of the Government, which thus suffered its seventh defeat. Apart from this no substantial change was made in the Bill. Mr. Snowden early disposed of his surplus by introducing, on June 26, a bill to revise the limit. for old age pensions at an estimated cost of four millions. for the first year. This proposal became law before Parliament rose, on August 7.

On June 18 Mr. Lansbury in the House of Commons called the attention of the Government to a statement made by Mr.

Justice McCardie in trying a libel action brought by Sir M. O'Dwyer against Sir C. Sankaran Nair, to the effect that in his opinion General Dyer, in giving his notorious shooting order at Amritsar three years previously, had acted rightly, and had been wrongly punished by the Secretary of State for India. Mr. Lansbury raised the question whether Mr. McCardie could not be removed from the bench for making so injudicial a statement, but the Prime Minister pointed out that the words were an obiter dictum and not part of a written considered judgment, and however unfortunate in their effect on India they did not constitute a moral delinquency which would justify an address to the Throne petitioning the Judge's removal. At the same time he stated that the Government associated itself emphatically with the decision taken by the Government of the day in respect of General Dyer. As public opinion in India, which naturally was greatly excited by Mr. McCardie's remarks, continued to be inflamed, Lord Olivier on July 17 sent to the Government of India a despatch in which, in order to correct any misapprehension that might have been created, the Government expressly dissociated itself from the view of the learned Judge that military action for dispersing an unlawful assembly might be determined by the moral effect which the officer taking it thought that it might have on other persons elsewhere, and reaffirmed the principle laid down by Mr. Montagu in 1920, that military action in support of the civil authority should be confined to the use of the minimum force necessary.

Mr. Lloyd George was again the spokesman of the Liberal Party at a great demonstration held at Belle Vue, Manchester, on June 28, at which the audience was estimated at 20,000. Mr. George described it as the finest Liberal meeting since 1910. He compared the state of the political atmosphere to the physical state often experienced by aviators in quiet and sultry weather when after sailing along serenely for a time they suddenly flew into a "pocket," which caused them to drop dangerously. The Conservative Government had come to grief in this way in the previous year, and it behoved Liberals to be prepared for a similar contingency befalling the present Government. The peculiarity of the present situation, said Mr. George, was that every one was professing Liberal principles. He was sure, however, that the Conservatives would revive the cry for Protection at the first opportunity, and as for the Labour Party, though they were bringing in Liberal Bills, their heart was not in the work, and therefore it was not possible that they could do it well. A short time afterwards an unofficial Committee which had been got together by Mr. Lloyd George issued a book called "Coal and Power," which set forth Mr. George's ideas for developing the country's electrical resources. The book created some stir, but its proposals were adversely criticised by experts, and it succeeded no better than Mr. George's speeches in rallying the country to a Liberal Party united under his leadership.

On July 7 the Prime Minister announced the decision of the Government with regard to the Channel Tunnel scheme, a memorandum on which had been laid before them by the House of Commons Channel Tunnel Committee. The memorandum stated that fully four hundred members supported the scheme, some, however, with the proviso, to which the Committee assented, that the approval of the naval and military authorities and of the Committee of Imperial Defence should first be given. This body had accordingly been consulted, and after a thorough investigation had reported adversely to the scheme. From the point of view of security the Committee, while not wishing to overstate the risks, were advised, as their predecessors had been advised, that there was undoubtedly an element of danger involved, and there appeared no room for doubt that the existence of a tunnel would add something to the anxieties of those responsible for national defence, and to the country's commitments and expenditure. And, as Sir H. Campbell-Bannerman had said in 1907, even if the military dangers were guarded against, there would still exist in the country a feeling of insecurity which would lead to a constant demand for increased naval and military expenditure. On the civil side the only advantage of importance would be the facilitating of passenger traffic, but this would be at the expense of the steamship services. The number of workers for whom the tunnel might provide employment directly and indirectly was estimated at not more than 12,000 in Great Britain and as many in France. These advantages were not held to be commensurate with the disadvantages from the defence point of view, and the advice of the Committee, which the Government felt bound to accept, was that the scheme should not be proceeded with.

In the course of the summer friction developed between the Foreign Office and two countries in which hostile feeling towards England had long been rampant-Mexico and Egypt. The underlying cause of the trouble with the former country was the persistent refusal of Britain to recognise the revolutionary Government of General Obregon-a course of action which caused some surprise in England also, and for which no explanation was offered. The attitude of the British Government was accurately reflected in the behaviour of its representative in Mexico, Mr. H. A. C. Cummins, which so irritated the Mexican Government that on May 13 it addressed a request to Mr. MacDonald to withdraw him at once, stating as a reason that he had addressed insulting letters to it on the subject of the attacks made by brigands on Mrs. Evans, an Englishwoman owning land in Mexico. As Mr. Cummins stayed on, this request was followed by a more peremptory note on June 14, threatening that if Mr. Cummins did not surrender himself, His Majesty's Legation would be broken into. Mr. MacDonald on June 16 and again on June 19, referred in Parliament in terms of strong condemnation to the action of the Mexican Government. He read Mr.

Cummins's letters to show that they were perfectly proper and contained nothing to which the Foreign Office could object. He made an official request to the Mexican Government to take no further step till the arrival of a mission from Sir Thomas Hohler which was on the point of proceeding to Mexico for the purpose of bringing about more friendly relations between the two countries. The Mexican Government refused, and Mr. MacDonald thereupon persuaded the American Government to arrange for the safe withdrawal of Mr. Cummins, and to take charge of the Legation and the archives. Mr. MacDonald denounced the behaviour of the Mexican Government as highly discourteous and wholly inexcusable; he did not, however, take any further step beyond cancelling the visit of the Hohler mission.

The affair with Mexico was followed by a much more serious embroilment with Egypt, arising directly out of the "continuity of policy" pursued by the Government in foreign affairs, apart from the questions of Russia and reparations. In consequence of the Labour Party's declarations when in Opposition, its advent to power had inspired in Egypt hopes that England would withdraw from the Sudan. To dispel these hopes once and for all, Lord Parmoor in the House of Lords on June 25 stated emphatically that the Government was not going to abandon the Sudan in any sense whatever. This statement was welcomed by the Marquis Curzon as "thoroughly satisfactory," but it aroused violent resentment in those, both in England and in Egypt, who expected different things of a Labour Government. Zaglul Pasha, the Egyptian Premier, protested vehemently, and was with difficulty dissuaded from resigning his office. On June 30 Mr. MacDonald made a statement in Parliament which opened the door to discussion with Egypt of the status of the Sudan and expressed the hope that Zaglul would visit London to confer with him on the matter. Some Labour members sent a telegram to Zaglul begging him to accept the invitation. On July 10 there was a discussion of the subject in the House of Commons which revealed general agreement that the Sudan should not be placed under the domination of Cairo. The Premier repeated that he was most anxious to enter into negotiations with Zaglul, and again expressed the hope of seeing him in London. He said that he appreciated Zaglul's difficulties, but asserted emphatically that the status quo in the Sudan could not be changed till the negotiations were completed, at the same time paying a tribute to the excellent work done by British officials in the country. His speech did not make it easier for Zaglul to accept his invitation, and the Egyptian Premier for a considerable time abstained from committing himself. Mr. MacDonald meanwhile had his hands full with more important affairs, for preparations were now in full swing for the long-desired international conference on reparations.

CHAPTER III.

THE LONDON CONFERENCES.

THE first step of practical importance which Mr. MacDonald was able to take towards putting into operation the Dawes Report on reparations was to entertain M. Herriot, the new French Premier, at Chequers on June 21 and 22, and to discuss with him the possibilities of Anglo-French co-operation. As in his public speeches, so in this interview M. Herriot showed himself far more in sympathy with the British outlook than his predecessor had been; consequently substantial progress resulted from his visit. An official communiqué issued by the Foreign Office on June 22 stated that though no definite conclusions could be arrived at pending consultation with the Belgian and Italian Governments, the conversation had revealed general agreement between the French and British points of view, and on the part of the two Prime Ministers a common determination to meet the difficulties which beset their countries by continuous co-operation. It was agreed that, subject to the convenience of the other Allies, a Conference should be held in London not later than the middle of July for the purpose of definitely settling the procedure to be adopted. The two Prime Ministers also agreed to pay a brief visit to Geneva together at the opening of the Assembly of the League of Nations in September. In Parliament the next day Mr. MacDonald stated that the proposed Inter-Allied Conference would deal solely with the Dawes Report, and that only when that was put into operation would they go on to discuss Inter-Allied debts. He also reassured anxious questioners by stating that the Dominions would be consulted in such a way as to make them feel that they were partners with England in all that was done.

The communiqué was received with general satisfaction in England, but in France it was bitterly criticised in Nationalist quarters. M. Herriot himself, in commenting on it in the French Parliament, added some glosses which made it appear to go further in support of France's claims than Mr. MacDonald had admitted in the House of Commons; and the Indépendence Belge published an interview with the French Premier in which he was reported to have said that he had received a firm promise to the effect that, as in 1914, in the event of a premeditated attack by Germany, England would be at the side of France and Belgium, and that he had the assurance of a definite pact binding England, France, and Belgium. On his attention being called to the alleged interview in the House of Commons on June 26, Mr. MacDonald denounced in strong terms reports that had appeared in certain newspapers regarding the conversations at Chequers, and said that the official communiqué covered the whole ground. He denied absolutely that there was any kind of an undertaking with regard to a defensive military