THE LOAN AND ITS LESSONS

Evening Post, Volume CXXXVIII, Issue 83, 5 October 1944, Page 6

THE LOAN AND ITS LESSONS

The satisfaction" that will be felt at the over-subscription of the Victory Loan will be increased by the realisation that the result has been made possible by a real community effort. Not'only have the two political parties subordinated their differences to the national need, but throughout the country people of all shades of opinion and in all walks of life have worked together to achieve a comiuon aim. A gratifying feature of the campaign has been the enthusiasm which members of the national and local loan committees, working in a voluntary capacity, have brought to their task. Great as was the objective set by the Government and disheartening as was the response at some stages of the campaign, the committees refused to be discouraged, and they are entitled to a large share of the credit for the final result. While at the moment the uppermost feeling will be one of satisfaction that the public have provided the money needed, there are several features of the campaign and of the public's [response that give cause for serious reflection. In spite of the fact that there was sufficient money in the hands of the public'to meet the loan with much to spare, it has not been, found easy to reach the objective, and it is timely to consider the reasons for this. . . In time of war the amount of money expended must depend on the needs of the situation, subject, of course, to the elimination as far as possible of waste and extravagance. As a result, it has become the custom to talk in millions. It would be a mistake, however, to assume that the rate at which money is spent during a war can be maintained in the post-war period without seriously endangering the economy of the nation. The lag which took place in contributions to the Victory Loan may be regarded as a salutary reminder of this. Although in the end the loan was oversubscribed, the lag gives warning that the raising of huge sums of money is not by any means an easy matter,: One obvious reason for the lag is that business people have been subjected to an unprecedentedly heavy burden of taxation, and have experienced great difficulty in building up reserves to meet the problems of the transition period from war to peace. They feel that it is their duty, not merely to themselves, but to those who will be looking to them for employment after . the war, to conserve resources for this purpose, so far as they can do so while meeting war demands. While still fol- ; lowing this prudent policy, they have t strained their resources to meet the i loan demand, but it is clear that there j are limits to the extent to which they . can go on doing this. > So far as the general public are con- ; cerned. one of the principal reasons for . the lag was obviously a feeling that • the end of the war was approaching, and that the day when they would have > an opportunity of freely spending their surplus money in the way they thought ' best was coming near. As we have j emphasised, this was a mistaken point F of view. The fact that such a feeling does exist, however, is a warning of what might happen immediately the 3 war is over, and it is a warning that c the Government cannot ignore. Any attempt by the public to spend their c money freely before there is a comT pensating supply of consumer goods 1 would have a disastrous effect on the " economy of the country. If the Govern--1 ment acts wisely it will consider- now ~ ways and means of directing the a people's money into profitable chana nels. People with surplus money c should be encouraged to use it in such t. a way that it will give them the y greatest benefit and at the same time c divert it from use in a» restricted c market. One way in which this could n be done would be to encourage people h either to purchase or build their own ss homes. If there is to be a concentrait tion on the construction of houses foi p rental, there will not be the same n incentive for people to use their monej ;- usefully as there would be if facilities ;0 were provided that would enable botl: ' Vf the State and private enterprise tc jl build houses for ownership. This'is i 0 matter that the Government should /_ seriously consider as one means o: bridging the period of transition fron war to peace.