WAR FINANCE

Dominion, Volume 35, Issue 7, 3 October 1941, Page 6

WAR FINANCE

Review Of Britain’s Position NEW VOTE SOUGHT Total Expenditure Of £13,000,000 A Day (Bn'tteh Official Wireless.) RUGBY, October 1. In a statement in the report stage of the supplementary vote of a credit for £1,000,000,000, the Chancellor of the Exchequer, Sir Kingsley Wood, said that two votes of credit of equal amounts had already been authorized toward this year’s war expenditure and the present vote should last until the end of December at the current rate of expenditure. Sir Kingsley Wood said that about £145,000,000 remained unspent out of the last vote, and this would carry the country over ianother two weeks. For the five weeks ended September 30, expenditure out of the vote which, of course, was available only for war services, amounted to about £11,000,000 daily, of which some £9,000,000 was appropriated to the fighting Services and £2,000,000 to a miscellaneous group of other war services. The expenditure on the fighting Services in June, when the previous vole was asked for, was about £8,000,000. The total national expenditure, including social services, amounted to about £13,000,000 a day. It was interesting to note, he added, that at the peak of activities of the last war, the dally expenditure was about £7,000,000, and the total expenditure only £1,000,000 more. In his Budget speech, the Chancellor of the Exchequer said,, he estimated the expenditure for the year would require credits of £3,500,000,000, excluding payments due to the United States, and if, as he expected, a further vote should be asked for in December, the total figure would be broadly within the estimate. , Check to Inflation. “I think I may say,” Sir Kingsley Wood continued, “that from such indications as are available the object which I put before the country six months ago, to finance the war by methods which hold the dangers of inflation in check, has so far been achieved. > "The danger remains, however, and there can be no relaxation.” Reviewing the sources from which war expenditure had been financed during the first two years, the Chancellor said that the total expenditure had been some £7,018,000,000 sterling, of which £5,666,000,000 had been devoted to war services. He recalled that the total war expenditure in the last war was considerably less than in the present war, and said that less than a quarter was met by current revenue.

Deducting £150,000,000 which was required for debt redemption during the last two years, no less than £4,350,000,000 had to be found by means other than revenue. Of this sum 17 per cent, had been covered by realisation on gold and foreign, exchange and by borrowing balances of non-Budgettixy funds. Twenty-one per cent, was provided by small savings, an achievement which was very remarkable. He added that the gross total of small savings almost reached the notable landmark of £1,000,000,000. Subscriptions from nonofficial sources to medium and longterm market issues provided 33 per cent, of the borrowings. Taxation Increase. Turning to income-tax, he said that the total increase of £500,000,000 in in-come-tax and sur-tax was about one and threequarter times the whole of the income-tax and super-tax paid in 1918, and with combined taxation at the highest point at the rate of 19/6 iu the £ it was clear that, the maximum rate had been practically reached, at least in certain ranges of income. Sir Kingsley Wood said he had seen it suggested that in the process of financing the war the country was rapidly bleeding to death and rapidly exhausting its ability to finance tl)e war on sound lines. “Such gloom and despondency are thoroughly harmful, and these views are based on quite a fantastic view of our position and have no relation to the realities of production and finance,”. he said. Mr. Fethick-Lawrence (Labour) deprecated old-fashioned ideas of finance, and said that as long as the productive resources of Britain remained there was no question of being bled white, whether the war be short or long. When the war was over there would be means of production left which would give a national income greater than the pre-war income. He thought that the expenditure for the year would probably be equal to two-thirds of the national income. Pointing out that this was the first war year when the Chancellor had not found it necessary to introduce a second Budget, Mr. Lawrence said this was due to the courage of the Chancellor, stimulated by the vigorous attitude of the House itself.

STRICTER CONTROL URGED

Preventing Inflation (Received October 2, 9.15 p.m.) LONDON, October 2. “How much longer will Sir Kingsley Wood’s methods for checking inflation be effective!” asks the “Daily Mail” in a leader. “We are approaching the time when the enormous pressure of new money will force up the prices of goods still available unless far more drastic control is introduced. Three months ago we were spending £10,250,000 daily; now we are spending £13,000,000. The vast annual total makes the record of the last war look almost like petty cash. The strain on our economy is colossal. “Sir Kingsley Wood gave no c l® ar indication of how the danger of inflation might be averted. He relies on taxation, price control and rationing, but none of these expedients has gone far enough. There remain fruitful sources of direct taxation which can still be tapped. Price control -is applied only to a limited range of goods and rationing scarcely ventures beyond the scope of necessities. Ihe Government has not the policy to check a rise in prices, then a rise in wages and then a rise in prices." The “Daily Mail” adds: “A more vigorous drive should be made to produce surplus cash by means of savings. This should form the framework of a policy which must be adopted if Britain is to escape ruin. Tighter control of prices, wages, and surplus money is vital to financial health. Everyone must live harder and do with less of everything,”