ar profits reduces them proportionately but can never annul
or quite overtake them. That is sufficiently obvious; but the fact must
be preliminarily emphasised because it is quite commonly assumed that
the mere imposition of a tax of 50 or 60 or 75 per cent automatically
solves the problem of war profits. As a matter of fact, taxation so far
from solving the problem leaves it essentially unchanged, and really
connives at and recognises the practice. The problem remains, in spite
of taxation, that one section of the nation is enriched by a process
which necessitates the misery and death of other sections. We may
therefore in a broad discussion of the problem leave out of account the
proposed and adopted palliatives of taxation.

Secondly, we may notice--this is brought out in the second
quotation--that profits directly produced by the war are not limited to
the period of the war. This again is really axiomatic, being only
another form of the platitude that it takes longer to construct than to
destroy: but it means that even a short war of sufficient intensity will
ensure a long period of profits, and therefore it noticeably aggravates
the conclusions to which I hope to lead.

A fundamental point is that the profit on freights, excused immediately
by the destruction of shipping,[38] leads indirectly to profits on such
other commodities as food and coal, not only on account of the actual
scarcity resulting, but also because any reason for increasing prices is
made a pretext for increasing profits.

But the scarcity of all general commodities is caused not only
indirectly by the primary scarcity of ships, but also directly by the
same conditions of warfare as those which affect shipping. That is to
say, just as the intensified activity of the nation at war creates a
livelier demand for ships, so it also creates a greater demand for all
the ordinary commodities of living: and just as war by destroying ships
reduces the available supply, so by its general destructiveness it
reduces the supply of other commodities: and just as war by destroying
ships makes extraordinary profits for shipowners, so by destroying
tables and teacups it makes unusual profits for the makers of tables and
teacups. In short, destruction creates demand, and demand gives occasion
for profit.

This is a disquieting statement; because though one might hesitate to
deduce from it that any particular merchant must be in his commercial
capacity a consciou