ll depend, as always, on
its output of goods and services; but only a transfer of consuming
power from taxpayers to debt-holders in accordance with the sacrifice
made by the latter during the war. What we produce as a nation we
shall consume as a nation, subject to the extent that we financed the
war during its course by operations abroad.

These operations were twofold. We sold to foreigners part of our
holdings of foreign securities, thereby and to this extent paying for
war cost out of capital--out of the investments made by ourselves
and our forbears in America and elsewhere. Mr Bonar Law, in a recent
interview in the _Observer_, stated that we had sent back to the
United States practically the whole of our holdings of American
securities to be sold or pledged as collateral for loans, and that the
value of them was three billion dollars--L600 millions sterling. Any
of them that have only been pledged can presumably be used to meet the
loans raised as they fall due, and so will lighten our burden in the
matter of repayment. These loans raised abroad are the second mode of
foreign financing. By it we had raised up to November 9th nearly L1300
millions, as shown by the _Economist's_ table, and to that extent we
have pledged our future production and that of our posterity, to meet
the annual service for interest and repayment. On the other hand, all
this sum and more we have (as shown above) lent to our Allies and
Dominions, so that the ex-Chancellor was well justified in his boast
that we had only borrowed to finance our Allies, and that we had been
self-sufficient for our own war cost.[1]

[Footnote 1: Budget Speech, Parliamentary Debates, vol. 105, No. 33.]

In other words, all that we needed for the war we were able to produce
ourselves, or to obtain in exchange for our produce and assets. On
paper, therefore, our position as a creditor country is only impaired
by our sales of securities. But that is only so on paper. In fact, the
loans that we have raised abroad are good debts that have to be met to
the last penny, and are a first charge on our future output, but the
advances that we have made to our Allies, much harder hit than we are
by the war, are assets on which we cannot depend. They were taken in
our balance-sheet above at half their face value, but there is much to
be said for writing them off altogether and tearing up the I.O.U.'s
of our foreign brothers-in-arms. Their need is greater than ours, it
woul