IMPRESSIVE FIGURES.

Sun (Christchurch), Volume II, Issue 438, 6 July 1915, Page 12

IMPRESSIVE FIGURES.

LLOYD GEORGE'S FINANCE PROPOSALS.

DEFICIT OP OVER £800,000,000.

In a recent speech, Mr Lloyd George, the then Chancellor of the Exchequer, outlined Britain's financial responsibilities in the following terms:—

On the assumption that the war lasts a year you have a total expenditure of £1,136,434,000. Deducting revenue on the existing basis of taxation and two other items, suspension of new sinking fund and additional taxation, the deficit to be met is £862,322,000. That is the sum which this country will haw to raise, in addition to the revenue already imposed, in the course of the current financial year. We have £4,000,000,000 invested in foreign arid colonial securities. The difficulty is that practically the only countries, with one exception, the U.S.A., where you can realise that wealth are at war, If if is a 12 months' war it will involve raising £i;i32,000,000 im this country in one way or another; £270,000,000 would be raised bv taxes. There is still a balance of £862,000,000. I have said that £200,000,000 we shall be advancing to other countries. The difficulty is not the indebtedness, but the raising of money to meet liabilities. Take another difficulty—Britain in times of peace has the greatest international trade in the world. I think Germany comes second. Take the vear 1913: Our imports exceeded our exports by £130,000,000. How is that paid? First of all by freight and other services rendered. That would probably account for £120,000,000 to £150,000,000. What is over? W r c have interest on £4,000,000,000—the" two together come to £350,000,000. That is our side of the account against an adverse balance of £130,000,000. That means £220,000,000 to us. Now comes war. Our imports have increased. Four millions of our best men have been taken away from our industries. Two in the Army or Navy. Another two turning our munitions. What is the result?

We have to provide munitions and material for war abroad, and food. But • our manufacturing energy is converted to something else, and we have lo buy abroad what we should have bought at home. That means our imports have increased enormously, and our exports gone down very, very considerably. How Germany is Affected.

How does it affect Germany? In Germany both her exports and imports have been cut off by the Navy. We have to maintain ourselves, feed our population, feed our manufacturers, either out of the produce of our own country or out of reserves and material, or by imports. Germany cannot import—observe the difference. From the point of view of a War Minister, Britain is better off. 'lFrom the point of view of a Finance Minister, our difficulties are greater for the time being. Why? Because there arc no purchases from abroad. The margin of imports over exports in an ordinary year is £130,000,000. The margin this year will be £448,000,000,

That does not include Government purchases abroad. We have to finance the purchases of most of our Allies abroad.

That means instead of having to finance a difference of £130,000,000, we have to finance a difference of £700,000,000 to £800,000,000. The interest on investments and freightage will be the same, because freights have gone up. Therefore £350,000,000 still represents a sum these interests and services represent. We have still £350,000,000 to £400,000,000 to find to finance purchases from abroad. These are the two problems with which we are confronted. What services can Britain best render to the great combination? She can keep the command of the sea for the Allies. She could maintain a great army. The third service Britain can render is bearing the main burden of financing the Allies in purchases outside their own countries, and also helping the. Allies with the manufacture of munitions. Britain can do the first and third. She can only do the second within limits if she has to do the first and last. Recruiting and Munitions. The lime has come when there should be discrimination so that recruiting should not interfere with the output of munitions and that it should interfere as little as possible with the output of those commodities which we export and which enable us to purchase munitions. Even if we maintain our exports we have to raise £1,100,000,000. What are the possible means of bridging this great deficiency? There is first of all a pape'r bridge that is known as dilution of the currency. Disguise it as they will there are many girders in the German financial bridge made of paper, and no amount of paint and varnish will hide the fact. You water the currency and the prices go up. A country which has no foreign trade—which is the case with Germany—can do it. A country with a great international trade cannot do it. Gold would vanish and there would be a rise in prices of provisions fatal to any chancellor. What is the second method? It is the sale of her existing securities

or the creation of new ones by borrowing abroad. What is the third, and in my judgment the only one that would help us through and see we are not damaged after the war? To depend largely on the income of the country. What is the income of the country?—£2,4oo,ooo,ooo in times of peace. Now it is probably higher. Why? We are spending hundreds of millions of borrowed money. Men are working time and overtime. Wages are higher. Profits in certain trades are considerably higher. The result is the income of the country is probably higher than in times of peace. It would be perfectly just when we have to consider what taxes to raise to resort to those who have made exceptional incomes out of the war. Even that would not carry us through. The Community's Savings.

The Slate in carrying through a great war like this must primarily depend on the savings of the community. The ordinary savings arc £300,000,000 to £400,000,000. The income is higher, the standard of living is considerably reduced. The savings of this country during the war, when the income is higher, ought to be double. What does this mean? If the standard of living is lower, then with an increased national means the savings ought to be increased. The extent to which you should tax is a question with which we shall be confronted prob-, ablv later on.

In the Napoleonic wars our ancestors faced it like men. They began with a war tax of one-seventh of the national income; they proceeded to one sixth, to one fifth, to one fourth, and ended with two-sevenths of their income.

What I want to point out is thai if the savings of the nation are increased, there is a fund available to relieve existing securities, or to invest in any national loan. It is vital if we are to take our part not merely in financing our own share, but in helping the Allies to finance theirs, that the national savings should be increased. I should not be doing my duty if I did not call attention to these problems at this stage, giving the warning that if the war is prolonged it will be the duty of the House of Commons to consider what further contributions, and in what other form the community tan make to enable us to conduct the war, success in which is vital to the very existence of the Empire.