BAD WAR FINANCE 23

in their bank balance feel richer, but the result of
thus multiplying currency without any increase in
the supply of goods and services to be bought inevit-
ably helps the rise in prices which makes the war
costly, puts the burden of it on to the wrong
shoulders* and likewise cheapens the value of the
English pound as measured in other currencies. This
is why the evils involved by this process become so
relevant to the question now at issue.

If the Government is allowed to go on financing
the war by increasing the currency with the very
reluctant help of the bankers, the difficulties of
maintaining our gold standard and keeping the
exchanges in favour of London will be very greatly
magnified when the war is over and our gold reserves
are no longer protected by the submarines and the
high cost of shipping gold that they produce. It
therefore follows that all who have the true interests
of the City at heart should use all the influence they
can to force the Government to adopt a sounder
financial policy before it is too late.

It is true that our war finance has hitherto been
' sounder than that of any other warring Power, but
it has fallen very short if we apply the rough test
of the proportion of the cost of war borne out of
taxation and compare our performance with the
results achieved by our ancestors in the Napoleonic
and Crimean wars.

If we have done better than France, Italy,
Russia and Germany in this respect, it must also be
remembered that the financial prestige which these
countries had to maintain was not nearly so great