t charge look smaller and smaller as
compared with our aggregate income. Our foreign debt we can only meet
by shipping goods and rendering services. But since it was all raised
to be lent to our Allies and our lending of it was essential to a
victory which has rid mankind of a terrible menace, it is surely
reasonable that our creditors should not press for repayment in the
first few difficult years, but should fund our short-dated debts into
loans with twenty-five or thirty years to run. As to the home debt,
we can only lighten its burden on the taxpayer by making taxation
equitable. To this end reform of the income tax is an urgent need. We
have to lighten its pressure much more effectively on those who are
bringing up families, and by collecting it through employers make it
an effective and just tax on those of the working class whose earnings
and family liabilities make them fairly subject to it.

XVIII

THE REGULATION OF THE CURRENCY

_February_, 1919

Macaulay on Depreciated Currency--Its Evils To-day--The Plight of the
Rentier--Mr Goodenough's Suggestion--Sir Edward Holden's Criticisms of
the Currency Committee--His Scheme of Reform--Two Departments or One
in the Bank of England?--Not a Vital Question--The Ratio of Notes
to Gold--Objections to a Hard-and-fast Ratio--The Limit on Note
Issues--The Federal Reserve Act and American Optimism--Currency and
Commercial Paper--A Central Gold Reserve with Central Control.

Everyone has read, and most of us have forgotten, the great passage in
Macaulay's history which describes the evils of a disordered currency.
"It may well be doubted," he says, "whether all the misery which had
been inflicted on the English nation in a quarter of a century by bad
Kings, bad Ministers, bad Parliaments and bad judges was equal to the
misery caused in a single year by bad crowns and bad shillings....
While the honour and independence of the State were sold to a foreign
Power, while chartered rights were invaded, while fundamental laws
were violated, hundreds of thousands of quiet, honest and industrious
families laboured and traded, ate their meals and lay down to rest in
comfort and security. Whether Whigs or Tories, Protestants or Jesuits
were uppermost, the grazier drove his beasts to market, the grocer
weighed out his currants, the draper measured out his broadcloth,
the hum of buyers and sellers was as loud as ever in the towns, the
harvest-time was celebrated as joyously