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Full text of "War-time financial problems"

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method than it is theoretically possible to raise by
taxation. It is often said, " All this preaching about
taxation is all very well, but you couldn't possibly
get anything like the amount that is needed for the
war by taxation, or even by borrowing of saved
money. This inflation against which economic
theorists are continually railing is inevitable in time
of war because there isn't enough money in the
country to provide all that is needed."

This argument is simply the embodiment of the
old delusion, so common among people who handle
the machinery of finance, that you can really increase
the supply of necessary goods by increasing the
supply of money, which is nothing else than claims
to goods expressed either in pieces of metal or pieces
of paper. As we have seen, all that we have been
able to raise abroad has been required for advances
to our Allies and Dominions, consequently we have
had to fall back upon our own home production for
everything needed for our own war costs. Either
we have turned out the goods at home or we have
turned out goods to sell to foreigners in exchange for
goods that we require from them. But since we
thus had to rely on home production for the whole
of the war's needs as far as we were concerned, it is
clear that the Government could, if it had been
gifted with ideal courage and devotion, and if it had
a people behind it ready to do all that was needed
for victory, have taken the whole of the home pro-
duction, except what was wanted for maintaining
the civilian population in efficiency, for the purposes
of the war.