THE NATIONAL INCOME AND EXPENDITURE OF THE 

 UNITED KINGDOM 



"The Round Table," December, 1915. 



Neither in peace nor in war does a nation live on money. Its gold and silver coins 

 have, it is true, an intrinsic value of their own, but neither they nor its banknotes, nor 

 its currency notes, nor its bank deposits are its real wealth. Its real wealth is something 

 quite different. It consists of all those existing things which the efforts and sacrifices of 

 past generations, and of this generation too, have produced, and are from day to day 

 producing. It is from this mass of wealth, which either has been produced in the past 

 or is day by day being produced — i.e., from its capital and income — that a nation's 

 needs, whether in peace or war, can alone be met. There is only one other source, and 

 that a temporary and unstable one — namely, borrowing from other nations, or in other 

 words the sale by foreign nations of their goods for the time being on credit. No inflation 

 of credit, no increase of currency, no financial manipulation will of itself produce a 

 single additional grain of wheat or a single additional cartridge. 



It is interesting to compare the figures usually given by statisticians for the value 

 of our capital and income as compared with Germany's, and for the respective expendi- 

 ture of the two nations, a comparison that gives some remarkable results. Statistical 

 figures of this nature can only be very approximately true, and other difficulties arise, 

 in comparing results as between nations, whose standards of life and ways of living are 

 very different. Nevertheless they form an adequate ground for broad comparisons. 

 Dr. Helfferich, the present German Finance Minister, placed Germany's capital wealth 

 in 1913 at something under £16,000,000,000. He estimated the United Kingdom's 

 capital wealth at only £12,000,000,000. But British statisticians make a considerably 

 higher valuation, and usually give for the United Kingdom the same figure as he gives 

 for Germany — namely, £16,000,000,000. Since, then, the populations are respectively 

 68,000,000 and 47,000,000 our capital wealth per head is considerably greater, a result 

 due no doubt in the main to our much greater holdings of foreign and colonial securities, 

 which are usually said to equal about £4,000,000,000, though it is probable that they 

 have of recent years largely decreased in value. The comparative figures for income 

 yield still more striking results. For Germany we will take Dr. Helfferich's figures; 

 for the United Kingdom the figures of the Census of Production of 1907, though since 

 that date our wealth must undoubtedly have increased. 



■ ' , . _, _, « England Germany 



Goods and services produced and 



received, about £2,150,000,000 £1,960,000,000 



Goods and services consumed 1,800,000,000 1,560,000,000 



Surplus wealth 350,000,000 400,000,000 



It is vital to grasp how all-important is a nation's annual production of wealth. 

 Whether in peace or war what it lives on is what it produces from day to day. The 

 figures quoted above show that the wealth — i.e., the materials, goods and services — 

 produced each year in this country are not much less than one-sixth of the total capital 

 wealth of the country, resulting from the efforts of all past generations. It is true that 

 the great bulk of this annual production is immediately consumed, only something 

 under one-fifth being added to the capital stock. Yet nothing could show more clearly 

 that a nation's true wealth lies in the harmonious employment of the energy, skill, 

 productive capacity, and thrift of its citizens. A nation's production of wealth is not 

 something fixed. It is capable of being indefinitely expanded by the application of 

 increased capital — i.e., by the savings of the nation transformed into additional or 

 improved plant, into labour-saving devices, into increased motive horsepower per man, 

 and, on the other hand, by the greater efficiency of labour, superior management, and 

 the greater co-ordination of the efforts of labour and capital. But, if, owing to extrava- 

 gance and failure to save the necessary capital, owing to inefficiency of labour, restriction 



7 



