August 21, 1915. 
LAND AMD WATER 
no increase of goods produced, and so tlie price of goods 
goes up. To this extent war, wliich otherwise tends to 
clean the financial stable, has produced some deteriora- 
tion. We shall put this right when we really begin to 
save and to pay for the war by self-denial instead of 
inflation. 
For behind all these financial devices and ingenuities 
lies the great problem of production and consumption. 
Finance is only mechanism. When a nation is at war 
people are too apt to talk as if it were faced by the 
problem of raising money. What it really has to do is 
to produce or go without goods and services. Anybody 
can print money and manipulate credit. But if that is 
all that can be done a rise in prices is all that follows. 
What a nation needs for war is an extra supply of food 
and clothes (because an army on service or in training 
wants more food and clothes than a crowd of civilians 
mostly leading sedentary lives), and rifles and shot, and 
shells and guns, and horses and motor-lorries, and 
aeroplanes and saddlery, and the coimtless items of its 
equipment as a fighting people. And the question that 
it has to face is its power to produce these things for it- 
self (which it can only do if it goes without other things), 
or to get them from other people if it cannot. On this 
point the position of the two warring groups presents a 
contrast which is one of the most interesting problems 
of the war. 
The Enemy's Problem. 
Our Fleet has cleared the German ships off the sea 
and made it impossible for neutral bottoms to carry to 
Germany articles that we declare to be contraband of 
war. Consequently we have compelled the Germanic 
Powers, apart from such war stores as they can smuggle 
through neutral countries, to live on their own resources. 
Some of us thought that we should thereby bring them 
to their knees, by cutting off their supply of food and 
material. But there is no sign of such a result, and we 
need not lay any such flattering unction to our souls. 
Germany had been preparing for war for years, and was 
by no means caught napping. Nickel, rubber, and 
copper are the chief articles that she requires and cannot 
now import, but no one knows what store of them she 
has laid by. The food problem she has dealt with by 
economical consumption and increased production, and 
as long as she has labour available to till her ground and 
reap her crops, her larder will hold out. We have cut 
off her imports and her exports and her shipping busi- 
ness. She goes without imports and thereby piles up no 
debt abroad and uses the energy and labour that used to 
go into exports and shipping for providing the needs of 
.her army. So far this diversion of energy and labour 
appears to suffice, and as long as it does so she can go 
on fighting till further notice. It is true tliat she is 
increasing her debt nearly as fast as w-e are. 
Since war began she has issued ;^68o,ooo,ooo ■worth 
of loans and a number of Treasury Bills which it is im- 
possible to trace. This money has been, like the goods 
on which it has been spent, almost entirely provided at 
home. German investors have sold some securities in 
New York, but the extent to which the country has im- 
poverished itself by this method of raising the wind is 
probably small compared with our achievements in this 
respect. The end of the war will find the Government 
owing the people an enormous sum, against which 
the people will owe the Government a certain amount of 
mone}- raised by the pawnshops. As the people pay off 
the pawnshops, the Government pays off part of its debt ; 
for the rest it will tax the people to pay itself interest 
and repay itself capital. Taxation during the war would 
have been simpler, but taxation during war is un- 
popular, and if a people likes to delude itself 
that it is escaping a burden by subscribing to 
loans instead of paying taxes, there is no reason 
why it should not be indulged in this pleasant fancy, 
so long as it practises the necessary economy and 
saves what it subscribes. This Germany has to do 
because it cannot buy outside, and so the needs of the 
army can only be met by the abstention of the citizens 
from the comforts and luxuries that they used to enjoy 
and by their handing over their buying power to the 
Government in exchange for loans issued by it. 
Similar conditions govern finance in Austria- 
Hungary, except that its power to produce what its 
army needs is probably less than Germany's. No doubt 
Germany is supplying it to some extent, and the state of 
Austria's finance, which was none too robust when the 
war began, will be somewhat parlous at the end of it. 
Position of the Allies. 
With us and our Allies the financial position and 
the productive problem behind it are quite different. 
For the first time in our history we were ready for this 
war — ready, that is, to carry out that part of the pro- 
gramme that had been assigned to us. Our Allies, who 
had a much bigger problem in the matter of army 
equipment to tackle, were not ready either on the East or 
W^est. We consequently have had to help them indus- 
trially and financially by making supplies for them, 
buying supplies for them abroad, and lending them 
money. Also we found that our part of the programme 
had to be expanded considerably, involving the creation 
of an army of three million men and equipping it. Such 
an effort as this was no part of our original contract, and 
this fact excuses some of the financial mistakes that w« 
made at the beginning of the war. 
{To he continued.) 
BRITAIN'S LIVING SEER 
By the Editor. 
Cities and Thrones and Powers 
Stand in Time's eye 
Almost as long as flowers. 
Which daily die. 
But, as new buds put forth 
To glad new men, 
Out of the spent and unconsidered Earth, 
The Cities rise again. 
THIS was a vision of the Seer, seen long before 
the present tumult of death and destruction. 
And the eternal truth that underlies it brings 
to-day consolation and courage to sorrowful 
and quailing hearts, recalling what has been 
and pointing to what sliall be, if only strength and con- 
fidence endure. Rudyard Kipling, from the very first, 
has been a Seer and a Dreamer. Just lately his full 
works have been published in a new edition by Messrs. 
Macmillan, entitled the Service Edition, handy vtjlum^s 
at half a crown apiece. As one picks them up and reads 
haphazard story and ver.se, one grows conscious of a 
single soul-design running through them all, and where 
the British Empire is concerned of a conception which 
has never varied from the earliest da3'S. 
Hear now a son? — a song of broken interludes — 
A song of little cunning; of a singer nothing worth. 
Through the naked words and mean 
May ye see the truth between 
As the singer knew and touched it in the ends of all the Earth 1 
Twenty years have passed since Kipling wrote his 
" Song of the Engli.sh," of which this verse is the last 
of the prelude. He was then in his thirtieth year and his 
reputation as a writer was made. But to see tlie truth as 
the singer knew and touched it, we must go back thirty 
years farther, to Bombay, his Mother-city, where on all 
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