CREDIT NO SOLUTION

Otago Daily Times, Issue 24817, 17 January 1942, Page 2

CREDIT NO SOLUTION

FINANCING TOTAL WAR The fundamental proposition that a war is not fought with money but with men and materials and by dint of effort and sacrifice on the part of the people, is made by Professor D. B. Copland in a chapter on war finance included in the fourth edition of the Australian Economy. Professor Copland says that resources must be diverted from normal channels to channels required for the prosecution of the war if the nation is to attain a maximum war effort. Creation of money is the simplest, and may be the least useful activity of the Government. The mere statement of the cost of the war in money terms gives an inadequate and, to some extent, misleading picture of the real problems of a war economy. If the Government were to follow the comparatively easy course of financing the war by a free expansion of credit through the banking system, Professor Copland points out that once all idle labour and resources had been brought into operation a great disturbance would be caused to the whole economic structure by an inflationary rise in prices. The ailuring prospect of unbridled credit expansion could be dismissed as damaging S-ather than helpful to a country engaged in preparing for totalitarian warfare.