FINANCING THE WAR

Evening Star, Issue 23666, 28 August 1940, Page 9

FINANCING THE WAR

AUSTRALIA'S MARGIN FOR VOLUNTARY EFFORT RESPONSE TO LOANS Recently the Chancellor of the Exchequer, Sir Kingsley Wood, stated, iij the House of Commons that it was impossible to forecast the future rate of expenditure by Britain for war purposes, but no effort would be spared in money or in any other way till victory was achieved. According to a statement by the Australian, Trade Commissioner, in New Zealand, similar sentiments'' have been expressed by the Australian Prime Alinister, Mr Menzies, and the Federal Treasurer, Mr Spender, and have found a ready echo in the hearts of all loyal Australian citizens. The magnificent response to the two Australian war loans already raised, and the extraordinary enthusiasm displayed throughout the country in support of the war savings certificates campaign as well as the contribution to the in-terest-free loans and gifts of money to the Government, prove that Australians are fully seized with the importance of keeping the national war chest well supplied with funds, says Mr Critchloy. The Federal Government aims to keep Australia’s war' effort, financial and otherwise, on a voluntary basis as far as possible. Recently there was, some irresponsible talk that the Government intended to adopt a system of compulsory lending, and reports to this effect appeared in certain sections of the Press. COMPULSION NOT THOUGHT OF. Both the Prime Minister and the Federal Treasurer categorically denied that any such proposal had even been considered. “ The Government,” said Air Menzies. “ has never thought of compulsory loans.” Stating that there was no foundation for the report, Air Spender expressed the opinion that it was undesirable to speculate on means of financing, war expenditure. “ The War Cabinet,” ho said, “ is considering the question continuously, and at this stage it is impossible to make any accurate forecast of the amount which will be spent in the current financial year.” The suggestion that compulsory lending might be adopted in Australia has probably had its genesis among those who hare been studying a thought-pro-voking booklet, ‘ How to Pay for the War,’ by the noted English economist. Air J. AI. Keynes, who has suggested that every person in Britain in receipt of income over a certain amount should he required to make available to the Government a specified proportion. The main benefits of this plan, according to the author, would be to check' inflation during the war and to facilitate economic reorganisation after the war. The British Treasury authorities, however, have rejected the scheme, and these seems little likelihood of its being put into effect. CONDITIONS NOT COMPARABLE. Conditions in Australia are not at all comparable to those in Great Britain, where the full impact of actual warfare may have to be met at any time. Aloreover, the proportion of war expenditure to the national income is very much greater in Britain than in Australia. Latest estimates indicate that the cost of the war in Britain in the current year will represent more than 40 per cent, of the entire national income. Australia’s tentative war Budget, introduced last Alay, put the country’s expenditure on war and defence for 1940-41 at a minimum of £79,000,000. But as the Federal Treasurer has recently said, an accurate forecast at the moment is impossible. Assuming, however, that the figure reached £100,000,000, it would represent only about 11.7 per cent, of the anticipated net national income, which has been estimated on reliable authority at £857,000,000. Obviously, there is a wide margin yet for voluntary effort in Australia.