The Press THURSDAY, AUGUST 15, 1946. War Savings

Press, Volume LXXXII, Issue 24954, 15 August 1946, Page 4

The Press THURSDAY, AUGUST 15, 1946. War Savings

A special message to “ The Press ” this morning, reviewing the totals of war savings and the ladder of their maturities, serves to draw' attention to one of the points which the Minister of Finance is bound to have considered in drawing up the proposals he will announce tonight. About £14,000,000 fell due in June and may be lifted during the current six months; but it is expected that, because the savings campaign has been vigorous and the consumption goods market is still restricted, not more than £2,000,000 will be turned into cash. The remaining £ 12,000,000, then, will be added to the £ 12,000,000 falling due next June, making £24,000,000 that can, nine or 10 months hence, swell the free cash in the hands of the public. This is obviously an inflationary danger, since the supply of goods, though increasing, has not increased to anything like the extent necessary to match available spending power, nor is it likely to have increased to such an extent within a year. Yet it was argued, soundly enough, during the war, that saving was prudent and necessary, since it would withdraw purchasing power from the war-stripped consumer markets and reserve it for their post-war plenty. The position is over-simplified, however, by advice which ignores the question whether the post-war income of a fully employed community will not suffice to purchase its full output of goods and services, without the supplements of purchasing power stored up in war-time savings investments. It is not an easy question to dismiss, once it is asked, least of all in a community which has stored up unprecedented free savings in the Post Office Savings Bank and trustee banks, holds well over £ 100,000,000 on free deposit in the trading banks, and is circulating more than twice the pre-war note issue. At same time, the Minister of Finance is certain to make tax remissions, which will again liberate spending power; and he should make them, provided that they are primarily calculated to expand productive enterprise and output. If the situation is considered in this light, three inferences seem to be necessary. First, tax remissions should ’be cautiously balanced between trade and industry on the one hand and the individual taxpayer on the other. , The latter has fair claims for relief, and cannot, in any case, be treated as if his reactions were wholly rational and not at all emotional; but he will be better served, in the long run, by tax remissions designed to increase the flow of goods and to lower their price than by lavish additions to spendable income. Second, the problem of uncashable savings should be solved by definite plans which go further than the mere continuation of a savings campaign which, serviceable as it is, is sure to lose impetus in time. The aim should be to make sure that, to the fullest extent possible, war savings as they mature are converted into fixed or semi-fixed forms. And the third need is to avoid a continually rising pressure on wage levels, in money terms. The alternative is to see to it that the real value of wages holds or rises.