The Star. TUESDAY, JUNE 20, 1916. EDITORIAL NOTES.

Star (Christchurch), Issue 11729, 20 June 1916, Page 4

The Star. TUESDAY, JUNE 20, 1916. EDITORIAL NOTES.

WAR FINANCE. Thero is a consensus of opinion that Sir Joseph Ward has framed his estimates on a very conservative basis, but as it is thought that tho results will ■ enable the Dominion to meet a largo ■ part of -war expenditure out of revenue, uo one is disposed to adversely criticise tho Minister of Finauce for adopting a. course that has been strongly cou- ; demned in times past. Wo have the Minister's frank declaration that all new taxation proposals are designed to meet war expenditure. an~ it does not require a very deep knowledge of public finance for a man to realise that the more.war expenditure we can meet Out of revenue the bettor for tho country. .The difference between the two of providing the necessary aoney—loan3 and taxes—has been summed up by an expert in a sentence-: " Under the loan method interest would be paid in the future and under the fcax method it would not" The payment of interest in the future means taxes in the future, and the greater the amount to be paid the heavier tho taxes. Professor A- C. Pigou, in an.article an "Finance of the War," discusses Ulis question.' " What is the difference between the effects of raising 1000 millions from the better-to-do classes by .means of progressive ho esks, "and by means of ( war loans, which -will, as a matter of fact, be subscribed in a progressive sense? As regards immediate effects, there is no difference. These people provide the money more or less in the same propor- . tion whichever plan is adopted. But es regards aggregate effects, thero is a very great difference. Under the tax method the rich and moderately rich really shoulder tho whole Burden of the charge that is laid upon them. Under the loan method they do not do tnis. because they are compensated afterwards through taxes laid for that purpose partly on themselves but partly also on other and poorer sections of the community. Under the tax method a great deal of money is obtained from the Tery rich, and the rich of this ' generation without compensation. Under the loan method the same amount of money is obtained from them, but a contracir is appended to the effect that the poorer classes in future generations shall pay money to their descendants as a reward for their present patriotic conduct. That is tho vital difference between the two methods." The . Dominion earnestly desires to jssist the Empire in every way in. this great crisis, and afterwards when peace again reigns, but the financial policy adopted now, while it will have no iini mediate effects, must help or hinder the Dominion in the days to come. Already our war loans have added a heavy annual charge against our revenue, and the heavier the borrowing the greater the annual bill. This being so, the Minister would bo warranted in in.creasing the tax on excess profits from 45 to 60 per cent, thus placing tho Dominion on the same footing as Britain and Australia. The added revenue, if devoted solely to war expenditure, would strengthen the financial position and, as Professor Pigou has said, would place on the shoulders of the rich and the moderately rich the burden that they are quite capable of tearing. RUSSIA'S CRISIS PASSED. It seems reasonable to entertain tho belief, after a review of tho splendid forward movement of Russia's new armies, and the series of victories won by the combination of the dogged fighting qualities of the Czar's soldiers with the possession at last of abundance of munitions, that the current of Avar has turned finally in our great ALy's favour, and that the successes secured- will be resolutely followed up. It was the N lack of munitions that paralysed Russia's efforts towards tho middle of last year, and that forced upon her commanders thl tragic necessity of giving ground to the invaders. It was sheer want of shells that made imperative the retreat, doubly poignant because of the magnificent dash and endurance displayed by the Russians in the field. It was necessary to fall back jn order to gain time for moro decisive efforts, and recent events haro fully vindicated the trust reposed by thoso who knew tho Russians best in their

ultimate complete recovery and their return to the sceno of action in vastly stronger fighting trim and backed by supplies of war material practically exhaustibleIt was a colossal task, this reorganising of a fighting nation and rehabilita/tion of its munitions supply. Tho Russian Minister of War, Gcraeral Polivauofr, a few- weeks ago explained to a French correspondent at Petrograd something of the vast exertions which enabled tho country to build anew its war forces. "Almost everything," ho said, "had to be created, for we were used to receiving much from abroad, particularly from Germany. But wo got there. It has been an absolute rovolution, an absoluto transformation of our industrial activity and almost of our customs." The Minister displayed diagrams showing tho prodigious development or industrial ostablishmonts working for the national defence. " With tho national production and with tho enormous markets abroad dispensed with," ho assured his interviewer, "we can, as regards munitions, look to tho future with confidence. Many things were lacking, but now the graver gaps are filled. Tho morad of tho troops is excellent. Thanks to tho mobilisation of tho great mass of men ordered some months ago and the doubling of the number of our depots, we have now a permanent reserve of a million and a half young recruits, which will permit us to feed tho various units without sending to the front men with insufficient military training. It is a matter of capital importance to maintain the units absolutely complete; of that we are now assured. jAs the war is prolonged, so tho Allied forces increase, and so those of the Germanic Powers decrease.''' And, as the Minister tersely put it, "behind the four Allies there are the natural resources of the whole universe. Behind the army of tho Central Powers are exhaustion and shakiness." Final success may bo slow, x but it is sure. THE ALLIES' MUTUAL TRADE. A cable message which tells of Canadian Trade Commissioners visiting Britain, France and and scientifically organising trade with the Allies is one of many indications of the coming general expansion of commercial relations as between the countries engaged' in the struggle against the German effort for world domination. Canada's entry into the list of largo manufacturing countries is, no doubt, one of the considerations which have prompted her leaders to endeavour to secure new markets for the machinery and other lines in which she is becoming a formidable rival to the United States. Her enormous production of bread stuffs,, meat andfruit calls for the opening up of new export avenues, and there is no doubt that much more can be done in this direction, more particularly with the countries bord'ering on the Mediterranean. In return, many branches of trade which the Germans and their allies had largely monopolised may profitably be taken over by France and Italy. Wo in New Zealand cannot but be affected by the marked advancß along the whole front of inter-Entente trade relations which is the inevitable outcome of the war alliance. We have seen, for instance, frozen meat supplied to the French Army and to the French civil population, with satisfactory results, and we in common with Australia and Canada stand to gain very considerably by the new mutual acquaintanceship and the spread of a fuller knowledge of each other's needs and each other's resources. From France some details come of a promising scheme having for its aim the expansion of the French nation, a scheme which though primarily intended to continue and develop internal unity i 3 likely to exercise a powerful stimulating effect upon tho country's business with the other members of tho .Entente as opposed to tho Central Powers. The idea has developed into tho formation of a strong Society for tho .Extension of France, officered by prominent Frenchmen such as Henri Hergson, of the French Academy: Louis Barthow, a former Premier; Paul faultier, mining engineer; and Paul Delombre, former Minister of Commerce. A member of the union explained tho purpose of the association as an effort to bring together the representatives of all the branches of activity which hitherto have remained aloof from each other. Up till now, artists have nofc co-operated with manufacturers : uor have writers and men of business met together to discuss affairs of general interest. It is the intention of the new organisation to unito in action all those men who can contribute to the general defence of the country's interests. The categories to which the union will make its appeal include men of letters, artists, natural scientists, manufacturers, economists, agriculturists, in a word, all those representatives of tho national activity who, by their experience, are in a, position to direct the national energies toward that ideal of which France is the guardian. It follows that those activities ultimately will be directed towards a fuller commercial union and comradeship with the countries whoso soldiers have held "the far-flung battle lino, fide bv side with the sous of France.