Six Million Pounds Daily

Northland Age, Volume IX, Issue 17, 1 December 1939, Page 1

Six Million Pounds Daily

r H AT, according to the Chancellor I of the Exchequer, is the current ost of the war, which has hardly as et got into its stride, to Britain. It i 3 more likely to increase than de- j rease, but even if it can be kept at hat level for the duration of the war, j t represents a stupendous sum. For , ix millions a day is over two thousand j nillion a year, or six thousand mil- j ion pounds on a three year basis. Actually in the last year of the last i rar Britain was spending at the rate j f two thousand five hundred mil- | ions a year which was just about ! lalf the then national income. And j ince then the cost of war, like the j ost of everything else, has increased, i Even people who are used to hand- | ing figures find it difficult to realise j rhat is meant by a million, and, be■ond a vague conception of vastness, wo thousand millions conveys to hem no meaning they can really :rasp. If Britain had all the gold in he' world she would just be able to neet one year’s war expenditure. If t was raised by a level income tax in each of Britain’s 45 million inhabiants it would mean a payment yearly if over £44 from every man, woman ind child. Or from every family of nan, wife and two children over £177 nearly. Only a few months ago the English railway workers were threat•ning to strike for a minimum wage >f 50/- weekly, or £l4B yearly. Farm workers’ wages in England range ’rom 34/- to 40/- weekly, without illowances of any kind—from £BB to 2102 yearly. On a family basis every farthing they earn would not pay :heir share. The highest estimate of the total national income of Britain is £5,500 millions. Britain has already a million men withdrawn from production for war service, but has a large idle class, rich and poor, to fill their places. By strenuous efforts, similar to the speeding up of production in the last war, it would be possible to raise the national income to £6,000 millions. So that war costs would only absorb a third instead of a possible half. War Taxes and Loans How is the two thousand millions to be collected ? The Chancellor hopes to raise half of it by taxation, the other half from loans. Apart from war material purchased abroad and paid for in gold and not in goods—war planes from the United States, for instance—the two thousand millions must come out of the yearly income, half paid directly in taxes, half lent from current savings. That is to say, the people who save money and invest it now will have to cut down their expenditure so as to save at least three times as much to lend to the Government, not to be used as previously as capital to increase production, but to be spent, at the best, unproductively. And it will mean also that the nation as a whole will only have at most three-fourths of its income for current expenditure, which will mean a reduction in the standard of living, but very unequally spread over the various social classes. War Loans and Inflation If, as happened during the last war, more money is borrowed than is saved, then inflation is inevitable. The reason for that is simple. Money, the sort of money we have now, is not wealth but debt, to be redeemed in goods. If there is £IOO worth of money and £IOO worth of goods to redeem it, then the value of money is stable. If £l5O of money is issued nerninst £IOO worth of ffoods—and

savings can only be made in goods ot one kind or another—then money is inflated 50 per cent, £ls buys only £lO worth of goods. That in essence was what happened in the last war and what is quite likely to happen in this. Credit is coined into money that represents nothing, lent to the Government at interest as war loan, is spent by them for goods, and inflation follows. The Government does not worry over much, for the more money is inflated the less becomes the burden of the public debt; the sufferers are the public themselves. The French, after the last war, adopted the more

drastic, but more honest practice ot scaling down the value of the franc from ninepence half-penny in sterling to twopence half-penny, thus confiscating three-fourths of the people’s cash savings, and it says much for the patriotism of the French that they submitted to it more or less cheerfully. As the pound sterling bought a good deal less after the war than before it, the result was the same as in France but on a much smaller and less obvious scale. The Burden of Interest Assuming that the war ends with

an addition to the British public debt h of three thousand millions, and that A interest is paid on that at 3 per cent, " it means an addition to yearly taxation of £9O millions. To that must be it added the cost of war pensions, and t! the decrease of production by the loss t of many thousands of men, each of a which, looked upon as productive d capital, has cost on an average at s least £6OO to rear and bring up to t productive age. So it is inevitable a that the standard, of living of the mass of the community must be £ lowered, unless the national income j can be increased, or there is a differ- ( ent distribution, which will mean a t drastic cutting down of the higher c incomes. It is quite certain that Bri- r tain’s industrial population, most of whom are deeply discontented v. ith e what they are receiving now, will not come back from a victorious war to j. a harder and barer life than they are , living now. Politicians are lavish j with promises of a new and better s world when Hitler is crushed, which •] is being translated in the popular j. mind into more leisure, better wages, v decent houses and the prospect of a j larger life for their children if not , for themselves. That will of necessity j mean great changes in our industrial j and social system if the demand is to ] be met, for it certainly cannot be met ( under our present system of wasteful ( competition. It will mean a revolution of some kind, which we can only earnestly hope will be a peaceful one. How Will It Affect Us? To compare small things with great, how will the war affect us in the Do- ] minion ? Our total national income is roughly estimated at £l5O millions. < So if we were called upon to make equivalent war sacrifices to our kinsfolk in Britain we would have to raise £25 millions every year in . war taxation and save an additional £25 millions from our income for war loans. We won’t do that, at least as far as taxation is , concerned, by a long way. We did raise £B2s millions in war loans during the four years of the last war, an average of over £2O millions yearly, and have actually repaid nearly £2O millions of it, which makes relatively a better showing than Britain. If we borrow at the same rate for this war, at the end of three years there will be an addition of £6O millions to our present £290 million debt. At 4 per cent interest that means an additional taxation charge of £2,400,000 yearly. As we are hardly likely to be called upon to send as many men to the Front as in the last war, and there will be a less reckless risking of thenlives and limbs, the pension charge for broken men and the dependents of the slain is likely to be less, but it will still be considerable. . To-day, twenty years after the war—or rather the fighting—ended, we are paying over a million and a-half in war pensions (£1,597,524 in 1938). No one grudges that. It is indeed a pitiful return for the sacrifices of the recipients, but it adds to the heavy burden of taxation about which we perennially grumble. And we must be prepared to shoulder that additional burden of pensions now our men are to go overseas. We can only hope, for their sakes more than our I

own, that the pension need will be less. Counting the Cost Unlike the last war, we are going into this war with our eyes open as to what it is likely to cost in suffering and—what is of far less importance—in wealth. Yet it is well that we should at this stage honestly face all that this war involves; we will get less of a shock when the full bill comes in. Compared with the Mother Country we are a poor people, though happily for us wealth is better distributed and the standard of living of those who produce the wealth is higher. We will not be called upon to make the same sacrifices, though our interests are as much at stake as those of Britain in this contest, and we should be prepared to shoulder a proportionate share of the burden. That we will be called upon to suffer much, very much less, ought to make us bear our share more cheerfully.

The Parliament of Northern Ireland has made a contribution of two millions to Britain’s first year war expenses. * * * So many doctors and dentists have been called up for service that both professions have agreed to pool their practices in England. * ☆ ☆ A Buckinghamshire grocer was ordered to refund one penny, a profiteering over-charge on 31bs. sugar He was told he was liable to a fine of £IOO or three months in jail, or both