610 TRANSACTIONS OF SECTION l;-. 



reason for not raising all the position permits, and that at once. To boriow 

 instead of taxing now does not pay for the cost of the War, but means that the 

 payment is left to be made with usury for many long years after the War is 

 over. The more is borrowed, and the longer the borrowing lasts, the heavier the 

 taxation to be faced in the future. The taxation of 275,00O,000L per annum 

 (suggested as necessary a few years after the War if the present method of 

 borrowing virtually all the cost is continued) will be much heavier if hostilities 

 last beyond November. In any case the present taxation of 235,700,000?. 

 (budget figure for 1915-16) is much below that figure, when beyond question it 

 should already be much above it. Twenty per cent, of our normal national 

 income would be 450,000,000?., but there are obviously considerable difficulties 

 in raising such a sum while war goes on, for in practice it involves devising 

 new means of taxation, a further increase in the income tax (if its basis is not 

 considerably broadened) being quite insufficient to provide the amount. 



' For a time after the War there is likely to be a period of abnormal 

 prosperity, and after that a time of depression is to be anticipated. The first 

 period is put by Mr. Lloyd George at four or five years, but there is too much 

 reason to fear it may be much shorter — say two or three years. Thus the 

 greatest chance of lessening the burden which the War will leave behind it is 

 to be found in the two or three years after peace is declared. It stands to 

 reason that the time to tax heavily and to relieve posterity is much more the 

 time when savings are high by reason of private economies and special war 

 income than when the inevitable period of depression has come, hence taxation 

 should be increased at once and maintained at as great a height as the 

 position will stand, so that some relief may come when it is needed. We 

 have in the United States a good example to follow. After the costly Civil 

 War of 1861-65, the war taxation was unflinchingly kept up until the 

 National Debt was sensibly reduced. Between 1865 and 1880, the Federal 

 Debt fell from 570,000,000?. to 400,000,000?., in 1881 the Government was able 

 to re-borrow at 3^ per cent., and by 1887 the debt was reduced to one-half of its 

 maximum figure. The adoption of this policy did much to assist in the remark- 

 able recovery of that great country. If we can follow that example and reduce 

 our War Debt to one-half in twenty-two years we should certainly do so. 



' The United Kingdom will probably emerge from this War in a better posi- 

 tion than any of the other belligerent countries, none of which seems to be 

 meeting any part of the cost of the War or interest on War Loans out of current 

 revenue. Germany had a pre-W'ar debt of 1,040,000,000?., but it was not an 

 almost entirely unproductive debt like ours, for it is fully represented by the 

 value of its State railways, mines, lands, and forests. It is likely to have in 

 addition a War Debt of 1,500,000,000?., the annual service of which should 

 approximate to 85,000,000?. We have the advantage of the other belligerents, 

 because we are the richest of the countries at war, are more free from disturb- 

 ance to trade, and have suffered no devastation ; but the War will certainly put 

 us in a disadvantageous position as compared with the United States, which will 

 therefore have the after- War cream, while we shall have to be content with milk, 

 and the other belligerents with skim-milk.' 



Professor Dicksee and Mr. F. W. Hirst believe that the nation is better 

 able to bear heavy taxation during a war than during the years immediately 

 following the conclusion of peace, although the Professor assumes that the 

 taxation is ' intelligently applied, so as to hit those who are benefiting 

 financially from the war.' Professor Boyd Dawkins also writes in support of 

 immediate taxation, and urges that special imposts should be levied upon war 

 profits. Sir Edward Brabrook is inclined to recommend further taxation, but 

 regards the question as one of the greatest difficulty : ' The test of the propriety 

 of taxation is the ability of the community to bear it, i.e., to bear it without 

 sacrificing all that makes life endurable.' 



The views of Mr. D. M. Mason coincide in the main with those which we 

 quote later from Professor Bastable. While saying that no fixed proportion 

 can be laid down, he would raise as much as possible by taxation. " The advan- 

 tages of taxation,' he writes, 'as compared with borrowing consist in this, that 

 taxation comes home more directly to all sections of the community. This fact 

 tends to direct men's minds to the necessity of bringing the War to a close as 

 soon as possible. Loans, on the other hand, deceive the general community by 



