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Full text of "War-time financial problems"


It is a commonplace of political theory that the
Government has a right to take the whole of the
property and the whole of the labour of its citizens.
But it would not, of course, have been possible for
the Government immediately to inaugurate a policy
of setting everybody to work on things required for
the war and paying them all a maintenance wage.
This might have been done in theory, but in practice
it would have involved questions of industrial con-
scription, which would probably have raised a storm
of difficulty. What the Government might have
done would have been by commandeering the buying
power of the citizen to have set free the whole
industrial energy of the community for supplying
the war's needs and the necessaries of life. At
present the national output, which is only another
way of expressing the national income, is produced
from certain channels of production in response to
the expectation of demand from those whose pos-
session of claims to goods, that is to say, money,
gives them the right to say what kind of goods they
will consume, and consequently the industrial part
of the population will produce.

Had the Government laid down that the whole
cost of the war was to be borne by taxation, the
effect of this measure would lutve been that every-
thing which was needed for the war would have been
placed at the disposal of, the Government by a
reduction in spending on the part of those who have
the spending power* In other words, the only pro-
cess required would have been the readjustment of
Industrial output from the production of goods