Chancellor Discusses Britain’s Great War Finance Achievement

Northern Advocate, 17 December 1942, Page 6

Chancellor Discusses Britain’s Great War Finance Achievement

(8.0. W., 2 p.m.) RUGBY, Dec. 16. Replying to a debate on war finance in the House of Commons, the Chancellor of the Exchequer (Sir Kingsley Wood) said that the financial policy had been well defined and carefully conceived. The Government had endeavoured to see that it made the greatest possible contribution to the war effort and at the same time provided the strongest safeguards against economic and financial difficulties. Purpose of Heavy Taxation They had had to resort to the most heavy and painful taxation, first to meet, as much as possible, the cost of war as we went, in order to keep our necessarily large borrowing to a minimum, and. secondly, to reduce the large increase in purchasing power which war inevitably entailed, and which, if allowed free play in the increased demand for goods and services, would produce inflation. In the first three years we had met 42 per cent, of expenditure out of revenue, and for the current financial year the figure would be practically 50 per cent. In regard to the second object, measures like rationing, price control and stabilisation of prices, had held inflationary tendencies in check.

A Striking Aspect

One of the most striking aspects had been the universal acceptance of the burden of war taxation. There were some 9,500,000 wage-earners, blackcoated workers and others with small incomes, making a contribution of £270,000,000 a year.

The borrowing policy had threeobjectives: (It By imposing as large taxation as possible to keep borrowing within reasonable bounds; (2) to borrow as cheaply and reasonably as possible; (3) to keep short-term borrowing from non-Government sources as low as possible. In each of the first two years they had borrowed over 60 per cent, of the expenditure, but in the third year it was only 52 per cent., excluding floating debt, which carried an interest rate of 1 per cent. Loans cost only 21 per cent, compared with 5 per cent, in the first three years of the last war. The case had not yet been proved that savings banks were making excessive profits. They had loyally cooperated with the Treasury, and made a very considerable contribution to the war effort. Remarkable Savings Campaign The savings campaign had been one of the most remarkable financial efforts in history, and it had yielded £4,600,000.000. at an average of £30,060,000 a week, since the beginning of the war. Referring lo the post-war policy, the Minister said he .was not pessimistic or despondent. He wanted to see the policy socially just, economically sound and financially prudent.