TAXING CAPITAL n

in time of war for the equipment of the Army. It
may be that the benefit conferred by those who save,
in increasing the output of mankind, will be more
generally recognised, and that the supply of capital
may, when the war is over, be increased on patriotic
grounds, or on grounds even wider than mere
patriotism—a desire to help a great stride forward
in the material welfare of mankind.

Capital is a very tender plant, and it will be very
easy, if mistakes are made, to frighten those who see
the benefits of accumulation for themselves and
others. Labotir troubles and industrial unrest are
extremely likely to have the effect of destroying
capital by preventing it coming into existence. If
we remember that capital can only be created by
being saved, it becomes evident that if those who
save are threatened with too deep an inroad into
their reward for so doing, on the part of labour, they
will hesitate to save ; and if the action of labour has
this effect, labour will be sawing off the bough on
which it sits. For it is new capital that sets new
industry going, and it is only by a continual supply
of new industry that a continual demand for fresh
labour can be maintained.

There is also at present much mischievous talk
about a great tax on capital for the purpose of
redeeming, or hastening the redemption of, war debt.
It is clear at once that it is not possible to tax capital
if we remember that capital consists of the tools and
equipment of industry, or even, in the wider sense
of the word, of accumulated assets which have not
been consumed. Unless the Government is pre-