Greymouth Evening Star. AND BRUNNERTON ADVOCATE. SATURDAY, DECEMBER 2, 1939. WAR FINANCE.

Greymouth Evening Star, 2 December 1939, Page 6

Greymouth Evening Star. AND BRUNNERTON ADVOCATE. SATURDAY, DECEMBER 2, 1939. WAR FINANCE.

gOME realisation of the drain imposed upon the national treasure-chest by the war, apart altogether from the toll likely to be levied upon the nation’s manpower, may be gained from the remarks made in the House of Commons by the Chancellor of the Exchequer. It is doubtful, however, whether the average man-in-the-street will be able fully to grasp the implications of the stupendous figures quoted; in fact, expenditure at the rate of £2,400,000,000 annually seems more akin to the dreams of a mad financier, than a statement made in deadly earnest. But, of course, war is mad, and no one recognises this more keenly than the Allies, who exercised the greatest possible effort to keep peace in Europe. Perhaps a better idea of the financial commitments of Britain is given by Sir John Simon’s broadcast statement, to the effect that the war is already costing her at least £6,000,000 per day, while he has also estimated that the present annual expenditure is already half the-total income of the community. Taxation, it is expected, will produce nearly one thousand millions per year, and a similar, sum must be borrowed in order to meet the war expenditure during the seven months of the current financial year. This is indeed a staggering burden, and it

says a great deal for the British people, that they have cheerfully accepted it. and are facing even greater requirements in the future with equanimity.

The response made by the public to the appeal in connection with tlie issue of defence bonds and savings certificates is reported to have been highly satisfactory, and these contributions, coming mainly from small investors, form further evidence of national unity and the general desire to support the Government to the limit in the war effort. So far, apparently, there is no need seriously to consider a plan of compulsory saving, suggested by the economist, Mr. J. M. Keynes. He proposes that a percentage of

every individual’s income should be impounded in a savings bank account, which would not be available for spending until after the war. Every person would receive enough current income to carry on during the war in economical fashion, the balance . being accumulated in the blocked bank account, earning interest at two and a-half per cent. The proportion of income thus withheld would rise very steeply on the higher ranges of income, so as to discourage as much as possible the demand for luxuries and semi-luxuries. The savings bank would be able to invest these accumulations in Government bonds, and so solve the practical difficulties of loan finance. Presumably the savings bank would be allowed to invest these funds also in new private, capital issues for purposes approved by the Government, otherwise it is difficult to see how private financing could be carried out, except on a small scale. An aspect of the suggestion which has evoked approving comment is the stimulus to post-war reconstruction which would be provided by the gradual release of these savings after the war. In any case, the Chancellor may be depended upon to make sure that no coin is left unturned, which may be used to assist in meeting war costs. It is also a foregone conclusion that, however great may be the financial burden carried by the Allies, that placed upon the pockets of the German people will be at least as heavy. As Sir John Simon has pointed out, this war is the most expensive that has ever been fought, and victory will go to the side which can hold out longer than the other. The almost unlimited reserves at the disposal of the Allied Powers must give them a decided advantage over the Nazis, whose resources are already being seriously affected by the operation of the blockade and other economic factors. The chief hope of the enemy, that the conflict would prove to be short and sharp, has now been dispelled, and the passing of each day adds to the odds against German success. Herr Hitler’s aggressive plans were laid well in advance, and his full resources were lined up before he’ took action; but those of the Allies are only now being fully brought into operation. Sir John Simon has warned Britain that the war may impose the “most-fearful” sacrifices, but, whatever these may be, they cannot be comparable to the disaster which would be entailed by a German victory. That reflection will give any necessary stiffening to the determination of the democratic peoples, to raise the bets of the Fuehrer to the last shilling.