PAYING FOR THE WAR

Bay of Plenty Beacon, Volume 2, Issue 147, 15 April 1940, Page 7

PAYING FOR THE WAR

LESSONS OF LAST CONFLICT MECHANISATION COSTS RAISING OF LOANS Britain is studying the lessons of war linance of a generation ago in the attempt to discover the best method of organising the payment for the war. Broadcasting on November 22 last Sir John Simon, the Chancellor of the Exchequer, said: "This is the most expensive war that was ever fought"; and that means that fresh problems arc sentedExplaining his statement,, Sir John said some time ago that today an aeroplane cost from three to seven times as much as it did in ! the World War, that a division of troops costs nearly twice as much to maintain in the field, and that the cost of a battleship is two or three times greater. Mr L. Hore-Bclisha, until recently Secretary for War, added his contribution with the statement that in JOl4 the men marched on board the ships, the horses were led, and a light derrick could lift-what the soldiers could not carry. In those days there were 80 mechanised vehicles with the British Expeditionary Force, and it was a rare load that exceeded two tons. At the time that Mr Hore-Belisha spoke, 25,000 vehicles, including tanks, had already gone to France, and some of them were, of enormous dimensions, weighing 15 tons or more. Financial Experience. During the last war the British national debt rose from £650,000,000 to £8,000,000.000. Indebtedness of more than £3,000,000,000 to the United States was incurred, and is still almost entirely unpaid. The exchange value of the pound sterling fell so heavily that it deprived every Briton of half the gold equivalent of his savings. At the same time the cost of living increased. The problem has never been ed; even at the time of the outbreak of the present war the "Ministry of Labour Gazette" showed that the cost of living in Britain was 55 per cent above what it .vas in July, 1914. Simultaneously, taxation rose v.ntil it was at the highest level in the world. The general rate of income tax before the present war be;san was 5s (jd in the pound* In 1914 if was Is :kl in the pound. High interest rates (over 5 per ccjht was paid by the Government on many loans) were a contributing factor. Taxation Goes Up. At the outbreak of this war taxation shot up to a new high level.' The general income tax is now 7s 6d in the pound,, while persons in the higher taxation classes pay up to 14s in every 20s. Excise and other indirect burdens have also been increased so that every member of the community is bearing something of the war l'oad. ' National Savings Certificates and other methods of loans have been made available to the small investor. Propaganda has been begun to persuade w 7 age-earners that saving a substantial portion of their incomes will not only help to supply funds for the wa'r, but will restrict the rise in commodity prices. The rising cost of living is causing some concern. In the first month of the war alone living costs shot up (5% per cent. Mr J. M. Keynes estimated a few months ago that a £500,000,000 increase in Britain's annual wage bill would soon be in sight. It was for this reason that he advocated his plan of compulsory saving which would provide the wage-earner with money to spend after the war and help to reduce the upsets of passing from war to peace. However, the Government. so far prefers to rely on voluntary methods.