position as regards the peace establishments of Europe to-day in their
relation to the future peace of the world. What about the economic
position? I have mentioned that certain Powers have had their forces
drastically reduced, and that has brought with it a drastic reduction of
expenditure, but I have before me the naval, military, and air force
estimates of the eight principal Powers in Europe, leaving out Germany,
Austria, and Bulgaria, whose forces have been compulsorily reduced.

At the economic conference of financiers in Brussels in 1920 it was
mentioned with horror that 20 per cent. of the income of Europe was then
being devoted to arms. I find that to-day 25 per cent. of the total
income of these eight Powers is devoted to arms. I find, further, that
of these eight Powers who have budgeted for a smaller service, only
one--Yugo-Slavia--has managed to balance her budget, and the others have
large deficits which are many times covered by their expenditure on
arms. And this is going on at a time when all these eight nations are
taxed almost up to their limit, when the whole of their industries are
suffering in consequence, and when the danger of bankruptcy, which
horrified the financiers in 1920, is even more imminent.

That being the case, what has been done in the last few years to remedy
this matter, and why is more not being done? As you all know, this
question is in the forefront of the programme of the League of Nations.
And the League began to deal with it at once. Lord Robert Cecil will
agree with me that the framers of the Covenant, of which he is one of
the chief, could not foresee everything, and they did not foresee at the
time the Covenant was framed, that machinery would be required to deal
with this extraordinarily complex question of armaments. They created an
organisation then called a Permanent Military Command, still in
existence, to advise the Council of the League on all military matters.