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Full text of "War-time financial problems"

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simplest and cleanest way of bringing about this
reduction in buying power on the part of the ordinary
citizen which has been shown to be necessary for the
purposes of war finance ? Clearly the best way of
doing it is by taxation equitably imposed. When
the State taxes, it says in effect to the citizens,
" Your country needs certain goods and services,
you therefore will have to go without those goods
and services, and the simplest way to make you do
this is to take away your money and so ration your
buying power. Whatever is needed for the Army
and Navy will be taken away from you by taxation,
tod the result of this will be that, instead of your
indulging in comforts and luxuries, to the extent
of the war's needs the Government will use your
money for paying for what is needed for the Army
and Navy."

If such a policy had been carried out the cost of
the war to the community would have been enor-
mously cheapened. There need have been no general
rise in prices because there would have been no
increase in demand for goods and services. Any-
thing that the Government spent would have been
counter-balanced by decreased spending by the
individual; any work that the Government needed
for the war would have been counter-balanced by a
reduction in demand for work on the part of in-
dividual citizens. There would have been no
multiplication of currency owing to enormous credits
raised by the Government; there would have been
merely a transfer of buying power from individuals
to the State. The process would have been gradual,