EFFECTS OF THE WAR ON CREDIT, CURRENCY, AND FINANCE. 279 



and increased taxation. The theoiy of money must be applied with 

 great care at present, as this is a 'short period,' and it must be 

 distinguished from a normal period. ' Index numbers ' afford a fair 

 guide to amount of rise, but are not exhaustive. Professor Charles 

 Gide, of Paris, thinks that the issue of notes, which has been specially 

 large in France, has had very little influence on prices, since in 

 France prices have not risen as much as they have in England. 



V. Foreign Exchanges. 

 Report first combats impression prevalent abroad (as communi- 

 cated By Professor Achille Loria, of Turin) that there is ' a moral 

 prohibition on the export of gold,' and that England has in fact 

 ' a non-expoiiable gold standard. ' No doubt great exports have been 

 made. The British Empire controls two-thirds of world's output 

 of gold, therefore no good reason for any moral or patriotic impediment 

 to the most perfect freedom of gold export. Difficulties of American 

 exchange successfully removed by Dollar Securities Scheme. Pro- 

 fessor Gide holds that the depreciation of its exchange does not 

 necessarily indicate impoverishment of a country. 



VI. Economy, Individual and National. 



There are various types of saving which are of unequal value to the 

 nation. Mistakes arise from thinking in terms of money. We ought 

 to think ' in terms of commodities. ' It is clear that the best saving 

 is in imported goods ; next in goods which ' are produced under 

 conditions of diminishing return ' — e.g., ' saving in the use of wool, 

 coal, food of all kinds, cotton, &c., is highly beneficial.' Economy 

 in public expenditure is ' even more necessary. ' 



VII. and VIII. War Taxation and Finance. 



Eeport discusses relative advantages of financing war by loans 

 and by taxation. It is a matter of some doubt whether much addi- 

 tional revenue can be obtained by further taxation of commodities 

 except petrol and spirits. If further revenue is required it must be 

 obtained by a more scientific and equitable income-tax. At present 

 taxation of working-classes is based on their consumption of neces- 

 saries (apart from tobacco and intoxicants) ; canon of ' ability to 

 pay ' ignored. Amount of tax paid by working man through sugar, 

 tea, and other duties depends on size of his family and not of his 

 income. Conclusion. — Contributions required from working-classes 

 should be taken by income-tax on wages collected through the em- 

 ployer at time of payment. 



IX. Economic Conditions after the War. 



Appendix. 



Diagram illiistrating Day-hy-day Borrowing. 



By Mr. D. Dbummond Phaser. 



