mewhat questionable asset, and our loans to our other
brothers-in-arms cannot be regarded as likely to be recoverable for
some time to come, owing to the severity with which the war's pressure
has been laid upon them. With regard to the other assets in which
the Government has invested our money, such as factories, machinery,
ships, supplies and food, etc., it is at least possible that
considerable loss may be involved in the realisation of some of them.
It is, however, possible that the actual cost of the war to us during
the year that is past may turn out some day to have been in the
neighbourhood of L2000 millions. If, on the other hand, we deduct from
the L700 millions raised by revenue the L200 millions which represent
the normal pre-war cost of Government to this country we find that the
proportion of war's cost raised out of revenue is slightly over 25 per
cent. This proportion must be taken with all reserve for the reasons
given above, but in any case it is very far below the 47 per cent. of
the war's cost raised out of revenue by our ancestors in the course of
the Napoleonic wars.

It seems to me that this policy of raising so large a proportion
of the war's cost by borrowing is one that commends itself to
short-sighted politicians, but is by no means in the interests of the
country as a whole, or of the taxpayers who now and hereafter have to
find the money for paying for the war. In so far as the war's needs
have to be met abroad, borrowing abroad is to some extent inevitable
if the borrowing nation has not the necessary resources and labour
available to turn out goods for export to exchange against those which
have to be purchased abroad, but in so far as the war's needs are
financed at home, the policy of borrowing is one that should only
be used within the narrowest possible limits. By its means the
Government, instead of making the citizens pay by taxation for the
war as it goes on, hires a certain number of them to pay for it by
promising them a rate of interest, and their money back some day.
The interest and the sinking fund for redemption have to be found by
taxation, and so the borrowing process merely postpones taxation from
the war period to the peace period. During the war period taxation can
be raised comparatively easily owing to the patriotic stimulus and
the simplification of the industrial problem which is provided by the
Government's insatiable demand for commodities. When the days of peace