OUR WAR COST RAISED AT HOME 53

duction of goods for export. Otherwise the problem
of paying for goods purchased from abroad could
only be solved by the export of securities, and by
borrowing from foreign countries, so that the shells
and other war material that were required, for
example, from America, might be paid for by
American investors in consideration of receiving
from us a promise to pay them back some day, and
to pay them interest in the meantime. In other
words, we could only pay for what we needed from
abroad by shipping goods or securities. As is well
known, we have financed the war by these methods
to an enormous extent; the actual extent to which
we have done so is not known, but it is believed
that we have roughly balanced by this process
the sums that we have lent to our Allies and
Dominions, which now amount to well over 1300
millions.

If this is so, we have, in fact, financed the whole of
the real cost of the war to ourselves at home, and
we have done so by taxation, by borrowing saved
money, and by inflation—that is to say, by the manu-
facture of new currency, with the inevitable result
of depreciating the buying power of our existing
currency as a whole. How much better could the
thing have been done ? In other words, how much
of the war's cost in so far as it was raised at home
could have been raised by taxation ? In theory the
answer is very simple, for in theory the whole cost
of the war, in so far as it is raised at home, could have
been raised by taxation if it could have been raised
at all It is not possible to raise more by any other

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