ARMING FOR PEACE

Evening Post, Volume CXXVII, Issue 92, 20 April 1939, Page 9

ARMING FOR PEACE

EUROPE'S HUGE BILL

NOT LONG BEARABLE

BRITAIN DRAWS ON CAPITAL

(By Senex.)

if a big war would mean the end of civilisation and the ruin of Europe, it is beginning to appear that arming for peace is going to mean the ruin of Europe anyway.. This fact, first strongly underlined by Mr. H. N. Brailsford some months ago, was recognised by Mr. Neville Chamberlain last month when he referred to "ruinous armaments" and "the folly of the course we are all pursuing," and spoke of Britain's duty "to put an end to a situation which, if it is persisted in, ; must bring bankruptcy to every country in Europe." Scrutiny of the position serves to reveal just how serious that situation has become. In five years, since Hitler's advent to power, the national debt of Germany has trebled, because of arms expenditure. Since the budget in Germany is now secret that is merely an estimate, and one known to be on the conservative side. In four years the French spent the huge sum of £200,000,000 on their air force under a plan which did not even leave them with an efficient and powerful force at the end of it. In the present financial year Britain is purchasing arms at the rate of almost £1,000,000 a day—her Budgetary figure is £343,250,000. In the next financial year she will spent about £580,000,000, of which £230,000,000 will be from revenue. That is to say, her spending will be approaching £1,600,000 a day and will be five times what she spent in 1934-35. That is what five years of Hitler has done to Britain. VAST STERELE INVESTMENT. The influence of this course on the econoii v of Europe becomes very apparent when we examine what it has meant t_o Britain. In the first six months of 1938, 56 per cent, of all new capital investment was made by the Government for purposes of rearmament. Desirable as that may be, j in the existing circumstances, the long run effect of it is detrimental. In the long run it is sterile investment, producing n-thing Lut engines of death, or equipment designed to combat the weapons of other Powers, creating a lop-sided economy and representing nothing but a liability to the country. It is, in short, the creation of a wartime economy, aimed at an immediate purpose and sacrificing everything to the attainment of that goal. It diverts investment from other fields because money cannot be invested twice over, and it has resulted in expansion of the metal-working industries, and a trend away from the goods which are supplied to the individual consumer. It is "guns instead of butter." CHANGING BRITISH ECONOMY. There is another and equally serious side of the situation which can be realised only when the history of British trade in the last few years is scanned. The present-day Britain is no longer the old trading Britain which sent her goods in abundance to every quarter of the globe. Between 1932 and 1937 Britain had a net deficit of £96,000,000 on her external commerce and investments. In the past Britain imported more than she exported; the balance has been represented by the interest on her foreign investments. But even when those investments have been taken into account there has been a deficit over the years 1932-37. Britain's foreign investments used to return her about £87,000,000 a year. In the disastrous year 1931 she had a net deficit of £104,000,000 instead, and this new era began. Significantly, the highest yearly deficit in the period mentioned coincided with the most prosperous year that Britain has enjoyed. And thus it becomes clear that today she is living on capital, for 1938 certainly brought no recovery—her foreign trade was virtually halved. These facts give special significance to the admission by Sir John Simon that! while there will be a vastly larger sum expended on armaments this coming year, the amount derived from revenue will be less than it is this year, the sum of £350,000,000 coming from loans. That is to say, British capital is being conscripted again, and heavily.

That is not to say that Britain is

in imminent danger as the result of this large-scale programme. She can bear it more easily than Germany; the current year's expenditure is still only 7 per cent, of the national income, and is estimated in some quarters to be about one-fourth of what Germany is budgeting for arms. But it is clear | that prolonged competition at the present rate, or at any increased rate, jis out of the question. The British Government plans to spend in 1939----40 about 11 per cent, of the national [income on arms; probably more than that becEJuse of the fact that times are not improving. That being the case, it is clear that the situation of other countries is worse. They have hot the large financial resources, accumulation of a century of empire, that are owned by the British. Nor must it be overlooked that the actual expenditure of Britain is not a measure of the spending of the empire as a whole; the Dominions have their programmes, too, and some of them are substantial. But the situation introduces a new factor into the quest for peace: the pressure of money. It is not without inportance that in 1914 a much stronger Germany than the country of today found the burden of armaments trying her strength, and ability to build her fleet contracting. There is a very real danger that even a Fascist State, willing to subordinate ' the common needs of life to an urge to create guns and aeroplanes and machine-gun emplacements, will find the ability to do this ebbing and that its leaders will create a dangerous situation because of the fact that time is working against them.