September 12, 1918 
LAND &> WATER 
17 
The Financial Front : By Hartley Withers 
HUMAN nature being what it is, it was only to 
be expected that the continued story of AlHed 
successes would produce an outburst of rather 
extravagant optimism in the City. As long as 
it produces the right results, optimism is among 
the very few things in which extravagance can nowadays 
be encouraged ; but some of the wiser heads are beginning 
to wonder whether an outburst of cheery speculation in 
shipping and industrial ventures will be good, in the end, for 
those who have been indulging in it so heartily during the 
last few weeks. Speculation in the old-fashioned sense of 
the word, when people bought lines of stocks and shares 
that they could not afford to pay for, trusting to the usual 
facilities for carrying them over until they took their profit 
(or protected a loss) is not nowadays supposed to exist. 
All dealings are, ostensibly, for "cash" ; but a liberal inter- 
pretation is often possible of the meaning of this phrase, 
and enthusiastic punters can find several days in which to 
produce their own or somebody else's money to make good 
their purchases. And those who enjoy good credit can 
sometimes get accommodation from bankers to enable them 
to take up securities that they are only buying in the hope 
of a rise, and not by way of permanent investment. 
From the point of view of the austere moralist in finance, 
of course, it is everybody's duty to put every possible half- 
penny into National War Bonds, Treasury Bills, or War 
Savings Certificates, these being the only channels through 
which our money can go straight into the firing line in support 
of the men who are fighting so heroically for us. For anyone 
who has any doubt as to what to do with any surplus funds 
there can be no question that this is the right answer to his 
problem. At the same time, it is plausibly argued by stock- 
brokers that the speculator who buys with a view to a gambling 
profit, keeps a free market open, and lets out holders of the 
securities bought, and that in the absence of any other form 
of new issues on offer, any money that goes into Stock Ex- 
change securities must ultimately find its way into War 
Bonds. This does not quite necessarily follow, since, in spite 
of all the restrictions imposed on personal luxury, there are 
still a good many ways i,n which extravagance can be in- 
dulged in ; and it is rather noticeable that since we entered 
on the fifth year of the war, many people have let themselves 
go in the matter of holiday travel and other forms of relaxa- 
tion. If they have earned it by earlier austerity, and if 
they are only letting go with a view to getting a second wfnd 
for the last lap, which may be a long one, well and good. 
But it will be a very great mistake if people imagme that 
because our soldiers are carrying all before them at the 
front, we have any justification for giving up any self-sacrifice, 
if any that we make at home can be so described when com- 
parea with what our fighters have to suffer. All through the 
war our jinance, both public and private, has been vitiated 
by the delusion that the war could not last more than eight 
or nine months at the outside. Nowadays we seem to have 
learnt a little wisdom, and many of the most incorrigible 
optimists are confining themselves to the view that another 
year will see the end of it. Let us hope that they are right. 
But if we think that we are therefore entitled not to bother 
any more about the financial side of things, and take to 
spending our money just as we like (or can), we shall, literally 
and actually, help to retard the day of victory, and perhaps 
even jeopardise it. For it cannot be too often repeated that 
this question of war finance is not one of money, but of the 
goods that are behind tie money and controlled by it — 
diverted by its power into the right or wrong channel. If we 
spend our money on War Bonds it goes into goods that the 
Army and Navy need ; if we spend it on ourselves it goes 
into goods that we think we need, and thereby makes it 
more difficult for the Army and Navy to get the goods that . 
they need, and must have for victory ; because the supply 
of goods is at all times limited, and is more so than ever now, 
with so many millions of the flowers of our manhood in the 
fighting line or in training. Every time that we set anybody 
to work for us (which we do almost every^ time we spend 
money on anything) we reduce the supply of laboiu- that is 
available for the nation's needs. When we all go jaunting 
off from one end of the country to the other for change of 
air (though we could get quite enough of it within a fifty- 
mile radius of our doorsteps) we make demands on the 
country's coal stock, every ton of which will be wanted this 
winter for Army and Navy purposes, and for keeping us and 
our Allies warm enough to get through the work that has 
to be done. And so on all round the industrialcirclc. What- 
ever we use up for ourselves, in goods or labour, there is less 
available for our purposes or for national purposes that are 
essential to the conduct of the war. It is easy to argue that 
whatever we do the Government will get what it needs for 
the war, and that even if we do not lend it money that it 
requires it will somehow or other produce it, with the help 
of the printing press, or by banking credits. This is quite 
true, up to a point, and a great deal of the money that has 
been spent on the war has in fact been produced by these 
methods. And one of the consequences is that instead of 
our handing over money, the Government makes new money, 
and so we and it are spending against one another in a limited 
market, and up go prices, causing a state of feeling which 
might have results most adverse to the rapid and successful 
carrying through of the war to the right end. 
The Urgency of War Bonds 
Fi.is danger is all the greater every day that the splendid 
successes of the Allied armies make victory seem more cer- 
tain, and encourage our natural human frailty (so pleasant 
at the right time and place) to think that the effort demanded 
from us at home is not quite as^great as it was. "Conscious 
as we are of one another's faihngs," we express astonished 
horror at the bad time-keeping of some of the coal miners. 
What about the bad time-keeping of the well-to-do in the 
matter of subscriptions to War Bonds ? The Chancellor of 
the Exchequer wants 25 millions a week, and even if he gets 
them he will not nearly cover his deficit, whjch will be some 
2,000 millions for the financial year, but will have a big gap 
to fill by borrowing abroad and other objectionable devices. 
In many recent weeks he has been getting less than 20 millions. 
Those were holiday weeks, and it says much for the untiring 
effort of the War Savings Committee that the sales did not 
fall off more than they did. Nevertheless, it is high time to 
remember that this great war for liberty and justice was not 
invented in order to enrich civilians through high wages and 
high profits while their brothers are dying for the noblest 
cause that ever was fought for ; and that though we certainly 
cannot secure victory by making ourselves miserable, 'we may 
help to save the lives of better men than ourselves by giving 
thought to our financial responsibility. 
Our American cousins, fortunate, as usual, in having the 
mistakes of the Old World before them as a model of what 
to avoid, are conducting the operations of their financial 
front on sounder lines. They have throughout worked on 
the belief that they were entering on a long war, and have 
imbued their public with that conviction ; and they are 
already, though only in the second year of it, raising a larger 
proportion of war cost by taxation than we are in our fifth, 
though we have done much better in that respect than any 
of the European Powers at war. This, as even the Germans 
are beginning to admit, is the real test of war finance, for the 
borrowing policy, though pleasanter in appearance while the 
war goes on, leaves awkward problems behind it. The German 
theory of war finance — borrowing during the war and repay- 
ment at the end of it through an indemnity imposed on 
defeated enemies — is quite nice if it works ; but this time, 
when they will find themselves faced by a justly severe y 
claim for "reparation" in Belgium and France and elsewhere, \ 
they will find that there is something very wrong with the 
system, especially in view of the wanton damage that they 
are doing in their retreat. And yet the Allied victories are 
said to be causing a boom on the Berlin and Vienna Bourses, 
because they are bringing peace nearer ! But the Americans, 
according to a recent telegram from the Washington corre- 
spondent of the Times, are bringing in a Revenue Bill " framed 
to produce £1,600,000,000 or more — double that which was 
raised by taxation last year, and rather more than half of 
what it is planned to raise in war loans." Both we and, 
America had a Peace Budget of about 200 milHons. We, 
after nearly four years of war, had last April a War Budget 
(which some of us thought a tremendous achievement) 
framed to produce in revenue 842 millions — not nearly 
half the 2,130 millions left to be rajsed by borrowing during 
the present financial year. We have to remember, in justice 
to ourselves, that America began the war with a huge bonus 
in its pocket in the shape of profits made out of the belliger- 
ents during the first two and a half years of the contest. On 
the other hand, their distance from the field of battle makes 
it all the harder to bring home war's grim necessities, and 
makes their early readiness to meet so high a proportion of 
war cost out of revenue a wonderful financial achievement. 
