COST OF WAR

Greymouth Evening Star, 20 May 1941, Page 9

COST OF WAR

. fallacious expedients. ’ Confiscation, taxation, borrowing, J and inflation are four ways by which I Governments can transfer to thern- ’ selves the purchasing power they 1 must obtain for war purposes These • I wavs are examined by the National ! ! Bank of Australasia in its April sumirnarv. The second and third ways •!are constitutional and legal, and ; ' they have been, pursued in Austra- , Ilia. Inflation is described as the - mother of cost-free credit. Effects 5 of inflation, as recent history shows ■ are unrestrained profiteering with prices outstripping wages; destruction of business confidence: inescapable industrial unrest; reduced production of goods; loss of real value ol all savings in the form of deposits with savings and other banks, assurance

policies, moneys advanced on securities' and of savings in the form ol Government and municipal bonds. “In conditions of extreme inflation these all become worthless. So far in Australia,” writes the bank, “reliance has been placed mainly on taxation and borrowing, though limited recourse has been made to credit expansion in order to bring unused labour and other resources into useful service. At this stage and for the purpose it had real utility, but to rely on credit expansion as a major factor in war finance would be the height of folly. ... No expedient can relieve us of the real costs ol ivnr.”