40 WAR FINANCE AS IT MIGHT HAVE BEEN

Government has to face in war-time is that of in-
ducing its citizens to reduce their purchase of goods
and services, that is to say, to spend less, so that all
the things required for the Army and Navy may be
obtained by the Government. It is true that some
of the goods and services required for carrying on
war can be obtained from foreign countries by any
belligerent which is able to communicate with them
freely. In that case the current production of the
foreigner can be called in to help. But this can
only be done if the warring country is able to ship
goods to the foreigner in payment for what it buys,
or if it is able to obtain a loan from the foreigner,
or some other foreign country, in order to pay for its
purchases abroad, or again, if, as in our case, it holds
a large accumulation of securities which foreign
countries are prepared to take in exchange for goods
that they send for the purposes of the war. By
these two last-named processes, raising money
abroad, and selling securities to foreign nations, the
warring country impoverishes itself for the future.
When it borrows abroad it pledges itself to export
goods and services in future to meet interest and
sinking fund on the money so raised, so getting no
goods and services in return. When it ships its
accumulated wealth in the form of securities it gives
up for the future any claim to goods and services
from the debtor country which used to come to it
to meet interest and redemption. It is only by
shipping goods in return for goods imported for the
war that a country can keep its financial staying-
power on an even keel.