In 1922 also His Majesty's Government issued a declaration which clearly defined the purposes and the limits of their policy in relation to the establishment of a Jewish National Home in Palestine. The pronouncement largely achieved its object in removing misapprehensions and fears, and in moderating antagonisms. Certain political measures were taken also in Palestine, as well as in Trans-Jordan, to which I shall refer later. The international situation as well gradually cleared, and the stability of the régime that had been set up became more certain.

The combination of these factors-on the one hand the formation of effective police and gendarmerie forces, and on the other the adoption of the political measures that were needed and the stabilization of the situation generally-resulted, within the last three years, in a rapid pacification of the country. The spirit of lawlessness has ceased; the atmosphere is no longer electric; there have been no more raids from Trans-Jordan; all the brigands have been hunted down and either shot, executed or imprisoned. One life was lost in an inter-racial conflict over a piece of land, and occasionally a crime is committed which is suspected to have a political or racial origin. But there have been no disturbances of the public peace from those causes during these years. For some time past Palestine has been the most peaceful country of any in the Middle East.

As a consequence it has been possible to reduce the garrison. to very small dimensions. The large number of units, infantry, cavalry and artillery, British and Indian, which were here five years ago, have all been removed, with the exception of one cavalry regiment. That regiment itself has not been allocated to Palestine at the request of this Administration; it has been stationed here by the desire of the War Office, and it was, in fact, recently transferred to Egypt for several months; only a part of its cost is included in the charges in respect of Palestine. The garrison now consists of the 450 British gendarmes previously mentioned, the regiment of cavalry, one squadron of aeroplanes and one company of armoured cars. Some of the aeroplanes and cars are stationed in Trans-Jordan. The cost to the British taxpayer, excluding expenditure in Trans-Jordan, which was £3,155,000 in 1921-22, has been reduced year by year, and is estimated for 1925-26 at £640,600. If no untoward events occur, this sum also may be subject to reduction in the near future. I would recall that, apart from the cost of the garrison, there is not, and has never been, any grant from the British Exchequer in aid of the Civil Administration of Palestine. (I shall refer later to the financial assistance given to TransJordan.)

JUSTICE.

After public security, the second essential is a sound system. for the administration of justice. Without impartial and fearless tribunals for the judgment of crime and for the decision of

civil disputes, public security itself cannot be maintained, nor economic prosperity develope. Such a system was lacking under the Turkish régime. Its establishment was one of the first tasks of the Military Administration, and my duty has been only to maintain the structure which was then erected, with such minor amendments as experience has shown to be necessary.

British judges preside over the two sections of the Court of Appeal, over each of the four District Courts, and over two Land Courts. All the other judges and magistrates are Palestinians, drawn impartially from among the qualified members of the three religious communities. The scale of salaries of the Palestinian judicial officers has been largely raised above the Turkish standard, so as to conduce to a higher standard of character. The disappearance of the capitulatory rights enjoyed by foreigners before the War enabled a simplification of the judicial system to be effected. Provision was lately made for appeals from the Supreme Court in Palestine to the Judicial Committee of the Privy Council. The Executive is, of course, scrupulous in abstaining from any invasion of the independence of the Judiciary, and the Courts have won the confidence of the people. The cost of the civil judicial system is more than covered by the fees and fines received by the Courts. Cases of religious law and personal status are still judged, as under the Turkish régime, by the special tribunals of the several creeds. In the Moslem and the Jewish communities, the nomination of those tribunals has been put upon a new and more acceptable footing.

FINANCE.

The third pre-requisite of good government is a sound system of public finance. It was necessary to establish an honest and efficient organisation for the collection of revenue and the control of expenditure, and, for these purposes, to create a Treasury Department and an Audit Office, to train their staffs, to provide and supervise competent collectors, to construct the framework of departmental estimates, and to draw up financial regulations. Through the work of experienced and zealous officers transferred from the Colonial Service these heavy tasks have gradually been accomplished. Above all, it was necessary to stamp out the corruption among the officials which had been traditional in the country; it is believed that this also has, in the main, been effected.

Except in cases of clear necessity, it has not been thought desirable to effect rapid changes in systems of administration to which the people were accustomed, even though a certain measure of improvement might be expected to follow. For this reason the Turkish taxes have, in general, been continued. Certain among them that were irritating and vexatious have been repealed or amended. The practice of farming out to contractors

the collection of agricultural tithes has been abolished. The tax payable to secure exemption from military service has disappeared with compulsory military service itself. A number of changes have been made in the customs tariff. But, as a whole, the fiscal system remains much as it was.

Since the revenue is derived mainly from customs and tithes, and those duties have been on an ad valorem basis, the financial situation has been subject to serious disturbance on account of the fluctuations in prices that have been a feature of the postwar period. In particular, the sudden fall in agricultural prices in 1922 and 1923 throughout the world, involved the loss to the Palestine Government of more than half the revenue it had previously received from tithes. Owing to this, and to the economic depression from which Palestine suffered in common with most other countries, the year 1922-23 resulted in a deficit of £E73,000. The previous years had shown a surplus. Through the enforcement of drastic economies in expenditure, in 1924 the position was retrieved. A steady growth of prosperity, together with some minor changes in the customs tariff, have resulted in the year 1924-25 closing with a surplus on the year's working of approximately £E263,000.

It has therefore been possible to reduce the rate of the tithe which under the Turkish régime had been raised to 12 per cent. The tax took from the cultivator one-eighth of the gross value of his produce, and was felt as an onerous burden. The Government has reduced it this year to its ancient figure of 10 per cent., and has relieved the agriculturist at a single step of one-fifth of the weight of the tax.

During the period of nearly five years from the initiation of the Civil Administration on 1st July, 1920, to the end of the last financial year on 31st March, 1925, the total revenue of the Palestine Government has been £E8,900,000, and its total expenditure £E8,397,000. Included in the annual expenditures also have been a number of charges for what are usually regarded as capital expenses. In particular, the sum of £E175,000 has been provided towards the cost of purchasing the railway between Jaffa and Jerusalem from the French Company which had constructed it. The expenditure also includes the first instalment of £E69,000 on account of the annuity under the Treaty of Lausanne in respect of the Ottoman Pre-War Debt; but Palestine will only now begin to bear in full the heavy annuities laid upon it by the Treaty on account of its share of that debt.

An additional sum of £E2,436,000 has also been provided for further capital expenditures upon railway and other public works and services. Of this £E476,000 has been furnished from certain monies collected in Palestine by the Ottoman Debt Administration, which have not been spent for the service of that debt. The remainder has been provided by temporary loans from the Crown Agents of such amounts as have been necessary.

Palestine has hitherto had the benefit of the use, free of payment, of the main line of railway, and of certain other works, constructed by the British Army for military purposes during the war. The post-war value to Palestine of these assets has been variously estimated at from one to two million pounds. His Majesty's Government, in view of the financial difficulties of a new administration in its early stages, with a small revenue and much leeway to make up, has generously held it to be its duty as Mandatory not to require as yet any payment in respect of these assets. But the people of Palestine enjoy the use of them, and from some of them revenue is derived. They will not dispute that, in equity, interest and sinking-fund should be paid upon this debt when the financial situation of the country permits.

COMMUNICATIONS.

Under the shelter of adequate safeguards for public security, protected by an efficient judicial system, and fostered by the careful management of the finances, the other activities of Government of direct advantage to the people have developed within the limits fixed by the available resources. Necessary to all the rest of those activities has been the improvement of communications.

One of the very few services rendered to Palestine by the Turks was the construction of a considerable mileage of main roads. The system was extended and improved by the Military Administration, and still further by the existing Government. In addition, under the influence of the District Officers, a number of secondary roads have been built in many parts of the country by the voluntary labour of the villagers themselves. In this climate there is little agricultural work to be done during several months of the year, and the people are very willing to work, without payment, upon the construction of local roads, the advantage of which to their own interests is obvious and immediate. Altogether 280 kilometres of main roads have been newly constructed or rebuilt, and 600 kilometres of secondary roads, serving 177 villages, since the establishment of the Civil Administration.

Among the effects of this has been a remarkable development of motor traffic. In 1914 there was one motor-car in Palestine, a source of lively interest to the population wherever it went. There are now over 1,000. A number of these ply for hire in the principal towns and provide omnibus services between them. All sections of the population readily avail themselves of these facilities.

The revenue derived from motors, in the form of import duties on cars and on petrol and licence fees, is sufficient to cover almost the whole of the cost of maintaining, apart from constructing, the main roads.

The opening of the country by means of roads has encouraged the adoption of a higher standard of agriculture and a greater activity of trade; it has facilitated police control of the more remote and lawless areas, and it has greatly promoted the development of the tourist traffic.

The railway system before the war consisted of the line from Jaffa to Jerusalem, of which mention has already been made, and of a line, belonging to the Hijaz Railway, from Haifa to the Jordan Valley on the way to Damascus, with a branch to Acre. A branch to Nablus was added by the Turks during the war. All of these were narrow gauge. The British Army, in its advance from Egypt, constructed a broad gauge line across the desert to the frontier of Palestine, and then along the Maritime Plain to Haifa. It constructed also a branch line to Beersheba.

It was obvious that the efficient working of the railways in this small country required that all of them should be under a single management, and that this could only be a department of the Government of Palestine. This policy was approved by His Majesty's Government. A right conferred by the Treaty of Sèvres-which was unratified but accepted by the British and French Governments as operative for this purpose-enabled the Jaffa-Jerusalem line to be purchased, at a price fixed by arbitration. This line had already been converted to broad gauge, partly by the Military, partly by the Civil Administration. The main line across the Sinai Desert to the Palestine frontier, which remains in the ownership of the British Government, and the lines belonging to the Hijaz Railway, are under the management of the Palestine Railway Department, to which also has passed the main line along the coast from the frontier northwards to Haifa, with its branch to Beersheba.

Large sums have been provided to ballast and otherwise improve the main line, hastily constructed in the course of the campaign. A number of new engines, carriages and waggons have been purchased, and the system is now well provided on the whole with rolling stock. The train service is efficiently run. Great pains are taken to promote the comfort of tourists. Workshops at Haifa, in spite of a somewhat primitive equipment, carry out all the necessary repairs, even the most extensive, to the engines and rolling stock generally. Well-equipped new workshops are now under construction.

The Railway system taken as a whole yielded a revenue in the financial year 1924-25 of £E558,000, and involved an expenditure of £E390,000, or an excess of revenue over expenditure of £E168,000. Of this balance, £E124,000 accrued to the Palestine Treasury in respect of the Railways belonging to the Palestine Government itself.

The postal services, before the war, were largely maintained by agencies established by certain of the European Powers; the

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