purchased on the national account, and an increasing measure of control has been established over home-grown cereals, meat, and dairy produce. In order to prevent the artificial raising of prices through competition, these purchases are now carried out in concert with our allies through interally committees. As the year progressed the need for greater economy in consumption than was apparently attainable by voluntary means and the difficulties in distributing equitably the restricted supplies compelled the introduction of a system of rationing. The system began with sugar, and at the end of the year was gradually being extended to cover other staple foodstuffs. Beer and Other Articles Another large economy was effected early in the year by a reduction of the manufacture of beer from the 1914 total of about 36,000,000 barrels and the 1916 total of 26,000,000 barrels to a total of some 14,000,000 standard barrels. The manufacture of spirits for human consumption has been stopped. Strong measures have also been taken to restrict the consumption of coal, oils, timber, cotton, and other articles. At the beginning of the year the coal mines and iron mines were taken over for the period of the war, and Government control over the available supplies was established. A system of distribution of coal was then brought into operation, which has not only insured all necessary supplies, but has effected economy in railway transportation. It is estimated that this reform will result in an economy of no less than 700,000,000 railway ton miles in the carriage of coal. A Timber Controller was appointed to ration the greatly restricted supplies of wood. The consumption of petrol for private use was gradually curtailed until it was finally forbidden. Much has also been done to economize labor and material through the more active control in the national interest both of railway and canal transportation. Naval and Military Results The result of these drastic measures has been that, despite all the enemy efforts to win a victory by the destruction of the merchant shipping of the world, the British people have been able to prosecute the war with the utmost vigor during the whole year. The navy has continued to hold its predominant position at sea, has denied the oceans to the enemy for the purpose of transporting troops or supplies and has exercised an ever-growing pressure upon him through the blockade. At the same time, though the submarine menace has not yet been mastered, the supply both of the military expeditions in all parts of the world and of the civilian population at home has been maintained. It may, indeed, be said with confidence that as the result of the work of the navy, of the merchant marine, and of many civilian sections of the community the German attempt to win the war by the destruction of the merchant shipping of the world has been definitely baffled. In the military sphere, though no decision has been reached, great results have also been achieved. At the outset of the year the military prospects before the Allies were good. Their plans, however, for a converging attack on the Central Empires on all fronts were upset by the disorganization of the Russian armies which followed the revolution-a disorganization which ended in such complete dissolution that the Germans were enabled to transfer a large part of their eastern forces to the western front by the end of the year. None the less, during the whole of 1917 the German forces have been steadily pressed back from one highly fortified position to another in face of the systematic assaults of the allied armies. The enemy, indeed, has consistently borne. tribute to the terrible power of the British attacks and to the heavy losses, both on land and in the air, which they have inflicted upon him. The chief successes have been gained at Arras, Messines, and in Flanders. Non-European Theatres On the other hand, there has been a complete transformation of the scene in the nonEuropean theatres of the war. After a long period of comparative stagnation and failure, British arms have once more advanced to victory. The last of the German colonies-Gerhas been cleared of the man East Africa enemy; Mesopotamia, with its capital, Bagdad, has been rescued from the devastating rule of the Turk, and Southern Palestine, including Jerusalem, after many centuries of effort, has been liberated by Christian hands. British prestige, indeed, in the East, which had fallen to a low ebb, has been completely restored; Germanic hopes of southeastern conquest have been rudely shattered through the withdrawal of over 100,000 square miles of territory from German control, and the capacity of Turkey to continue the war has been gravely impaired. The military results of the year are thus very considerable. British armies have fought not in France alone, but in Italy, Macedonia, Mesopotamia, Palestine, and East Africa, and from being a combination of peaceful communities the empire stands forth as the most powerful of all the Commonwealths which are withstanding Prussian aggression. The extent of this effort, the unfailing courage and morale of the British armies, and the clear determination of all the British peoples to accept no peace which does not restore national liberty and public right afford ground for confidence that the Allies will eventually secure the purpose for which they entered the war. Social and Economic Changes There is a nonmilitary aspect of the administrative developments of the year which it is important to note. In themselves these developments have been the result of the de termination of the people to leave nothing undone which could contribute to the winning of the war. None the less they are bound to produce lasting and far-reaching effects on the social and economic life of the community. No record of the year would be complete which did not point out the changes which have been wrought in the structure of society by the experiences of the war. In the first place, the organic life of the community has been greatly strengthened. On the one hand, not only have enormous numbers of men, and latterly of women also, been mobilized for military and naval purposes, but the vast majority of the people are now working directly or indirectly on public service. If they are not in the army, the navy, or the civil service, they are growing food, or making munitions, or engaged in the work of organizing, transporting, or distributing the national supplies. On the other hand. the State has taken control for the period of the war over certain national industries, such as the railways, shipping, coal, and iron mines, and the great majority of engineering businesses. It has also made itself responsible for the securing of adequate quantities of certain staple commodities and services, such as food, coal, timber, and other raw materials, railroad and sea transportation, and for distributing the available supplies justly as between individual and individual in the national interest. Regulating Prices The Government has further had to regulate prices and prevent profiteering. It has done so partly by controlling freights, fixing maximum prices to the home producer, and regulating wholesale and retail charges, and partly by its monopoly of imported supplies. The information which the Government has obtained as to sources of supply, consumption, and cost of production, and the relations it has entered into with other Governments as to the mutual purchase of essential products which they jointly control, have, for the first time, brought within the sphere of practical politics the possibility of fixing relatively stable world prices for fundamental staples. The State has even taken the drastic step of fixing the price of the four-pound loaf at 9d., at a considerable loss to itself. Thus the war, and especially the year 1917, has brought about a transformation of the social and administrative structure of the State, much of which is bound to be permanent. Owing to the imperative importance of speed there has perhaps been an undue expansion of the function of the Central Government. But a very large amount of work has been devolved on to local authorities and to new bodies, such as the War Agricultural Executive Committees or the Local Food Control Committees. Taking the year as a whole the Administration has been brought into far closer contact with every aspect of the life of the people, the provinces and the metropolis have been linked more closely together, and the whole community has received an education in the problems of practical democracy such as it has never had before. The Industrial Problem In the second place, the war has profoundly altered the conditions of the industrial problem. Since 114 the community itself has become by far the greatest employer of labor. It has assumed control for the duration of the war over a great number of the larger private undertakings, it has limited profits by imposing an 80 per cent. excess profits tax, and it has intervened to prevent profiteering in the essential requirements of the nation. Further, the regulation of the trade unions have been suspended for the duration of the war, industry has been diluted throughout, new methods and new industries have been introduced, labor-saving machinery has been everywhere installed, and the speed of production and the number and skill of workers has greatly risen. The nation today is far better organized and far more productive than it has ever been before. With the advent of the new Government at the end of 1916 a Ministry of Labor was created to deal with labor questions. It is still early to speak of the results of its work, but an important step toward the creation of better conditions in the industrial world has been taken in the adoption by the Government of the report of the Whitley Committee, which recommended the development of machinery in the shape of industrial councils, representatives of employers and employed throughout the country, whereby it should be possible to solve the difficulties which will arise by the process of peaceful conference and negotiation in place of the methods of industrial war. Despite all difficulties and the recent increase in industrial unrest, it is probably true to say that as the result of the war there is now a better understanding both by capital and labor of their mutual problems than at any previous time. 1917 in Retrospect Looked at as a whole, 1917 has been a remarkable year. During it the war has assumed more and more the character of a struggle on the part of all the free nations for the final destruction of militarism and the establishment of an international order which will give real securities for liberty and public right throughout the world. The nations of which the British Commonwealth is composed have been drawn together in their joint effort for the common cause. And within the United Kingdom there has been a growth in the sense of public service and of the power to improve and adapt economic and social and administrative methods which will make it far easier to build up a healthier and more equitably organized society in future. THE BATTLE OF CAMBRAI Full Text of Field Marshal Sir Douglas Haig's Report of a Victory and Reverse The battle of Cambrai began on Nov. 20, 1917, with the successful surprise attack of the British Third Army under Sir Julian Byng, and came to an end on the night of Dec. 4-5 with the withdrawal of British troops from Bourlon Wood to "a more compact line on the Flesquieres Ridge. A German attack, which began on Nov. 30, had succeeded in wresting away a large portion of the British gains. This reverse was later the subject of British Parliamentary inquiry, but the commission found no serious military errors to censure. Sir Douglas Haig's official report to the Secretary of War is printed below in full. It acquires a fresh interest from the fact that the terrain fought over is in part the same as that across which the Germans have since swept in their Spring offensive of 1918. M General Headquarters, Feb. 20, 1918. 'Y LORD: I have the honor to submit the following report on the operations on the Cambrai front during November and December, 1917: 1. As pointed out in my last dispatch, the object of these operations was to gain a local success by a sudden attack at a point where the enemy did not expect it. Our repeated attacks in Flanders and those of our allies elsewhere had brought about large concentrations of the enemy's forces on the threatened fronts, with a consequent reduction in the garrisons of certain other sectors of his line. Of these weakened sectors the Cambrai front had been selected as the most suitable for the surprise operation in contemplation. The ground there was, on the whole, favorable for the employment of tanks, which were to play an important part in the enterprise, and facilities existed for the concealment of the necessary preparations for the attack. If, after breaking through the German defense systems on this front, we could secure Bourlon to the north, and establish a good flank position to the east, in the direction of Cambrai, we should be well placed to exploit the situation locally between Bourlon and the Sensée River and to the northwest. The capture of Cambrai itself was subsidiary to this operation, the object of our advance toward that town being primarily to cover our flank and puzzle the enemy regarding our intentions. The enemy was laying out fresh lines of defense behind those which he had already completed on the Cambrai front; and it was to be expected that his troops would be redistributed as soon as our pressure in Flanders was relaxed. He had already brought large forces from Russia in exchange for divisions exhausted in the struggle in the western theatre, and it was practically certain that heavy reinforcements would be brought from east to west during the Winter. Moreover, his tired divisions, after a Winter's rest, would recover their efficiency. For all these reasons, if the existing opportunity for a surprise attack were allowed to lapse, it would probably be many months before an equally favorable one would again offer itself. Furthermore, having regard to the future, it was desirable to show the enemy that he could not with impunity reduce his garrisons beyond a certain point without incurring grave risks. Against these arguments in favor of immediate action I had to weigh the fact that my own troops had been engaged for many months in heavy fighting, and that, though their efforts had been uniformly successful, the conditions of the struggle had greatly taxed their strength. Only part of the losses in my divisions had been replaced, and many recently arrived drafts, still far from being fully trained, were included in the ranks of the armies. Under these conditions it was a serious matter to make a further heavy call on my troops at the end of such a strenuous year. On the other hand, from the nature of the operation, the size of the force which could be employed was bound, in any case, to be comparatively small, since success depended so much on secrecy, and it is impossible to keep secret the concentration of very large forces. The demand made upon my resources, therefore, should not be a great one. While considering these different factors, preparations were quietly carried on, so that all might be ready for the attack if I found it possible to carry it out. The success of the enemy's offensive in Italy subsequently added great force to the arguments in favor of undertaking the operation, although the means at my disposal for the purpose were further reduced as a consequence of the Italian situation. Eventually I decided that, despite the various limiting factors, I could muster enough force to make a first success sufficiently sure to justify undertaking the attack, but that the degree to which this success could be followed up must depend on circumstances. It was calculated that, provided secrecy could be maintained to the last moment, no large hostile reinforcements were likely to reach the scene of action for forty-eight hours after the commencement of the attack. I informed General the Hon. Sir Julian Byng, K. C. B., K. C. M. G., M. V. O., to whom the execution of the plans in connection with the Cambrai operations was intrusted, that the advance would be stopped by me after that time, or sooner if necessary, unless the results then gained and the general situation justified its continuance. Plan of Attack The general plan of attack was to dispense with previous artillery preparation, and to depend instead on tanks to smash through the enemy's wire, of which there was a great quantity protecting his trenches. As soon as the advance of the tanks and infantry, working in close co-operation, began, the artillery was to assist with counter battery and barrage work; but no previous registration of guns for this purpose could be permitted, as it would rouse the enemy's suspicions. The artillery of our new armies was therefore necessarily subjected to a severe test in this operation, and proved itself entirely worthy of the confidence placed in it. The infant and artillery thus working in combination were to endeavor to break through all the enemy's lines of defense on the first day. If this were successfully accomplished and the situation developed favorably, cavalry were then to be passed through to raid the enemy's communications, disorganize his system of command, damage his railways, and interfere as much as possible with the arrival of his reinforcements. It was explained to all commanders that everything depended on secrecy up to the moment of starting, and after that on bold, determined, and rapid action. Unless opposition could be beaten down quickly, no great results could be looked for. The Commander in Chief of the French Armies, to whom I secretly communicated my plans, most readily agreed to afford me every assistance. In addition to the steps taken by him to engage the enemy's attention elsewhere, he arranged for a strong force of French infantry and cavalry to be in a position whence they could be moved forward rapidly to take part in the exploitation of our success, if the situation should render it possible to bring them into action. On Nov. 20 certain of these French units were actually put in motion. The course of events, however, did not open out the required opportunity for their employment, but the French forces were held in readiness and within easy reach so long as there appeared to be any hope of it. Had the situation on Nov. 20 developed somewhat more favorably in certain directions, the nature of which will become apparent in the course of this report, the presence and co-operation of these French troops would have been of the greatest value, The Enemy's Defenses 2. The German defenses on this front had been greatly improved and extended since the opening of our offensive in April, and comprised three main systems of resistance. The first of these three trench systems, constituting part of the Hindenburg line proper, ran in a general northwesterly direction for a distance of six miles from the Canal de l'Escaut at Banteux to Havrincourt. There it turned abruptly north along the line of the Canal du Nord for a distance of four miles to Moeuvres, thus forming a pronounced salient in the German front. In advance of the Hindenburg line the enemy had constructed a series of strong forward positions, including La Vacquerie and the northeastern corner of Havrincourt Wood. Behind it, and at distances respectively varying from a little less to rather more than a mile, and from three and a half to four and a half miles, lay the second and third main German systems, known as the Hindenburg reserve line, and the Beaurevoir, Masnières, Marquion lines. The Attack Begun 3. All necessary preparations were completed in time, and with a secrecy reflecting |