WAR COST OVER ALL AT PRESENT IS AT THE RATE OF £2013 A MINUTE.

Pukekohe & Waiuku Times, Volume 5, Issue 132, 14 January 1916, Page 4 (Supplement)

WAR COST OVER ALL AT PRESENT IS AT THE RATE OF £2013 A MINUTE.

"Stupendous as the financial burdens of the war may be, the resources of Great Britain will meet the demands made upon them." . The man who spoke was Reginald McKJenna* Chancellor of the Exchequer. He leaned forward eagerly, his long student face flushed with fervor; his eyes flashed conviction. We sat in the grim gray Treasury that had echoed the words of Disraeli and Gladstone, and where the real battle of the wi<" is being fought—the money struggle. From the street came the shrill shriek of the bagpipes as they played the troops on tbeir waj to the front.

I had a-.kjcl lh; ma,, who hc!;7s the Br.'tisn Jiirso strip's how long the money would last. It is the momentous question that agitates all Europe, and, reaching out across the seas, affects and concerns the whole United States. Human ravage can be repaired; shells are merely a matter of macmnes, but economic waste is what counts permanently, and becomes the final arbiter of defeat or victory. Today, after more than a year of bitter warfare, it is evident that industrial exhaustion will be the principal determining factor. The last silver bullet will win. To paraphrase Napoleon:. "God will be on the side of the biggest purse." At this moment innumerabk- (iirAcuities beset the financial historian of this war because of thy amazing scale upon which 't is projected, and the uncertainty cf its duration. The whole economic perspective m distorted. Where formerly millions of pounds loomed large, men now speak of billions as matter-of-fact details. A single battle consumes as much ammunition as was expended ;n the whole Boer War. One year of c inflict has cost England more than fell the years of Napoleonic contest. Put the Atlantic behind you, and you find a world in arms and obsessed by slaughter. No one knows when it will end; few stop to reckon the cost.

On the silent battle ground of finance is being waged that unsung fight to find the funds to feed the guns and gunners. Nowhere is this task so fraught with such tar Hung significance as in England. Why should England's pocketbook be such a pivotal factor in Shu outcome of the war? Because her own larger fate and the dest'.ny of the Allies are bound up in if. As England goes, so goes her cause. Shu is its fiscal-agent: the flnaicial rock upon which the whole .structure of the Entente is reared. A" "paymaster of Europe'' her mo:ijybags must stem or lose the ti ie of battle. Will they hold out? Her Chancellor !\ns told me iui: fhev will, and he sums up the sit t&tion as I find it. Let us now look at (he concrete facts upon which it is based.

Here is what England is doing: First of all she is the finnnr'a! "angel'' cf the Allies. Her leans to them and her own colonies already aggregate £400,000,000, .and with Italy in, and joint operations proceeding in the Balkans, it will doubtless be much more. Second: She has cleared 'he seas of enemy craft, and the price of this freedom (itself an 'inestimable service to her whole cause) is enormous. Third: She has organised .and equipped nn army o? time million men, the greatest In a':' English history. , ~ Fourth: She is lYrnishir.g "am-| munition, guns, clothing, and other war supplies to nearly all cl the j allies.

You lave seen the way the money Is being spent: now we can try to compute the bill.

THE COST OF .MODERN' WAR

When you start to estimate the cost of the war it is like "splashing at a ten-league canvas with brushes of comet hair," so stupendous arc the figures. Compared with it, all other wars are as fioubltes—as grapeshot to IC-inch siiclls. Roughly speaking, tho war for the first twelve months cos: C 750,000,000. The estimate for the sec ond year is £1,.".00,000,000; a .oral of two years is £2,250,000,001'. This includes loans to Allies and colonies. It is when you adapt these colossal figures to every-day t'-rms that they full meaning bursts upon you. Analyse this iiiuneiiff- outlay (and hear in mird this is i.lrnain'; cost alone), ar.l you find (:ia f—based on an yearly -est of a billion pounds—-it is at the late oi £2011! a minute .';:',.OOO.Oeii i any. Such is the mail-ret oucraio!! : n human slaughter on the dav th s article is written! Mow, this increased expenditure for living and the decrease in certain income all form pari of the price that the war exacts. Take the productive los 1 .. Three million men ordinarily engaged in production are now engaged in the creation of waste on a huge scale. The fanner is planting mines: the carpenter is building tumchos; the artisan is making shells and guns. All thin human effort, once dedicated to conversation, is concentrated on destruction of life and proper'; - The loss, of production in t'-e !i v st year of (he war is estimated at i £1 00,000.000. Then iherc is thft loss in '. Tins of human life. The oapilnliscl val.ic for the first year of Iho war is not less than C:jon,ooo,ofift, ;rid Uie daily ravagp of the war machine go"a on with bloody pace-. Th!i3 the yearly ecxl of I'm conflict is not. only the hi!!;- a nmr.ds or nioi'" ! ban can ; :• ''se •», " hut the sum of these (,ther intangible losses that .aj> the; lrniorm! vp, :.V'v ! and producing pov or. To nrrt thf first year's rm-d .-as no great drain. T! e r< <>'..-■< i■:• -• i; I was nn : by rim first :; >•'■ p- ,• <; -it j war loan of tP,.",f'."r,,; m ;; ;..• |.; : . 000,000; by Treasury bill:. an.l |,y j tea, and lieer. To pay the second vci'- rest j there w- ;■" revenues of '."•.' <', 7 ■ ')'■.- j 000, and the gr<\it war loan of i C(jon,0O0,OOO, This iiu ;'.'■. more i taxation, and perhaps another popu-j lar loan. The gi at war loan : new no eas;e. ! for banks, insurance companies, | friendly societies, railroads, ail vied i with the humbler man in getting a , slice. The net result was that less j than four weeks alter Commons vol- •

A NEW GOSPEL OF SERVICE.

By -Air. Isaac Marcos s :in in " Collier's Weekly."

Ed that historic blank check every shilling had been subscribed, and the war fund was £600,000,000 richer. To sum up, 0,0,000 people had taken £570,000,000 in multiples of .CIOO, and over 547,000 (and (and these represented the toilers) had bought £15,000.000 in small pieces. Since that time more than 2 00,000 men and women have become owners of the loan stock. The big fact just now is that England has adjusted her mind and her purse to an unprecedented expenditure. She will have to borrow not less than £2,ooo,ooo,ooo—possibly more. The future tax that this will make on the Exchequer is not pleasant to contemplate. As one economist put it: ''"Even if we continue borrowing at \ x k per cent. —and it is by no means certain —the interest on £2,000,000,000 Is £90,000,000 a year. You must have a fund of at least 4 per cent.; that makes £110,000.000. In addition to that, we shall have to lace as soon as the war is over a tremendous charge which no one has yet even ventured to guess at —for the pensions to those wounded in war and the pensions to the widows and dependents of those who fall. At the very least we cannot put that at less than £20,000,000 a year for the first few years. Thus we-will start after the war with a charge of not less than £130,000,000 in addition to what our last peace expenditure was.'

But what of to-day and to-mor-row? Enormous as may be the debt Incurred by the war now raging, the burden of financing it will be slight (relatively) compared with the wiping out of the Napoleonic debt that I have just cited. The reasons arcobvious.

The rnited Kingdom now has forty-seven million; her accumulated wealth is £18,000,000,000, and the annual income of her people Is £2,400,000,000. The income per head is £J2, while the tax prior to the war was only 1"! t head. Before the present war tie public debt had been reduced to .'-T00.000,000, which involved r.n ::*ij:iiiii interest charge of £17.3 ! I,:■'•■'». Now. if the total borrowing n.ist be two billions or more, the available funds to meet, the new burden will be manyfold greater in proportion than the funds, available for the wiping out of the Napoleonic debts, and the people are willing to pay.

THE RAVAGES OF WAK. The strangest phenomenon of this whole war as affecting England is that the rich have become thrifty—the saving has begun at the top. 1 know the case of a Briton whose income is £15.000 a year, yet by the strange irony of fate he had to borrow enough to pay his incometax. He, like many others who depend on Income, has been u'.t tiecause many corporations are petting dividends into "reserve'' against the pest-war rainy day. Indeed the war is the "las) straw" for the very rich of England who have felt a heavy burden of added income ami land taxation these past few years as a result of the Lloyd George social programme for the " uplift " of the masses. This is one reason why they seem willing to se;7e upon the first, opportunity to retrench with social credit. In short. —to use the phrase of quality—"it's done."

A DEBTOR NATION AT LABI

The most serious blow to i". ••: British economic system (and t is an assault on British at the same time) was tl'O American exchange collapre—the turn in the tide of affairs that made Eng'and a debtoi nation at. last. For the pe.'pose of explanation an attempt will be made to reduce it to the simplest terras. Buriness relations between nations are settled by balances, lingland's impeits from the Enitcd States aie paid for by her exports to us. ll' these are not enough, tho balance of trade is made up (us-

uaily more than made upl by the sum' v.c pay England for wtilev freightage, by 'merest on '.or investments in America, and by the cash our tourists spend. Hence England has been the piemier creditor nation of the world. Pat ii.o war changed all this. The drafting of 11.000.000 men to Urn colours put an enormous dent iiit■-• the English industrial output for c\ port. Ti:e great bnU: of producing machinery is geared up to war supplies. English exports dwindled and her imports soared. To put ; t in s

popular way: for each day jmacticaily sin'ce the war began England has keen buying from other eountiios (and especially tiie l.'nited States i CI ,000.000 mote goods than they have been l -ving from her. COOD OCT OP EYE,. The collapse of American exchange, however, was in no sense a serious reflection on British credit. It was an automatic movement in tho machinery of International finance. Rut for British procrast--nation it never would have happen-

Tin's optaorlo was n sort of ill wini i'iijli blow seme good. For on< thins, 11 rnabjrd n.ii ; s!i holders o! Ann rican scc-ui itios to realise ni: thorn at a ':■"!:(. In tie soronri plate, v.hon the nation v.'ol-e rp t( tho fact Hint i's imports were soaring and its exports dv.indlinji. H:< cry "('.(■ |. :;,'. imported sends' cpVanp; up pi! over the kingdom ;uhl Imcnsiii' the sl< Ran of a do.'lniK and o.rpanlFo,] i.weniriif. A n.niifica:-.: arunmonl is u-ed l i !'•■• cm:- mlc. Ii reads: "Tho dermans ordinarily l;ro f; ■•.!!'..non.nO'i worth of foreign good-* i. -■ r ii ■• nro 11 :■--';' i- v vn'v }'■•■',<• i' : Hi' '■' manai'" to ;" f, t everything r.rerssary for tl.o w;ir. v., suing is t< » rniall to conn!." Tins Rtiitomoiit shews v.iiat mosl Ki'v'lisl'ii'on are fr!i* « r.';'.:~h to p.><niit. nam-ly. that limy have f.-.ucrin flcrn'.iriv I lc r.n] ionic lesson of r -f"p ,,,.,-. :. T; ,i 11,ry ;■•,(■ having E-Toat ilillinili.v in t' at '.ing ii to Ihe'ii-\V.\n-T!MK nnXEFHT. Kor is this all the lioncfif M,nt war lias wrought, if such a thing as food ran rotno out of colossal evil. First of all, an immense amount of

money has been put into circulation. Not all of it is going for drink, although the percentage dissipated in this way is far too large. Some of this circulation is going to cheap finery and household luxuries that until the war the working classes b'elieved wero eternally beyond them. In the vicinity of the training camps (and England is one huge camp) the shops are in a riot of prosperity. All the allied industries that supply these shops are sharing it. It reaches out in every direction. A cash-register salesman told me that his business in the vicinity of the great cam]) at Salisbury bad increased 75 per cent. Then, too. the revenue to the great mass of country people from billeting troops is very large and gives thousands of families whole new leases of life. ENGLAND'S SOUNDNESS. Why is England sound economically? Here are the main reasons: She is the richest of the belligerent nations, and much of her wealth notably her foreign investments, is convertible into cash. She is, in the main, free from <Y\aturbance of trade, while industrial Germany is bleeding to death internally. More than any other country /it war she has kept the foreign trade moving. She remains a "going concern.'' Her holch carry British goods wherever lb.' trade winds blow. On the other banc", Germany has made a bonfire :>f her foreign trade and her mareuaut marine is useless. While Germany is utilising iJi her means, England has only touched the fringe of her resources in men, money, material, and food. Save for sporadic Zeppelin rains, she has suffer*:! no devastation, and is practically free from invasion. There has ' eeu no hoarding of gold-no Inflation. Unlike German gold, which is impotent, English gold Is a liv 9, liquid, and weikinc ageift.

A very significant evid>nc<:> of England's soundness is in the 'tern of currency. Where Germany's huge issue of paper money is almost without real gold reserve, nearly all o! England's £68,000,000 is "covered" by gold. The British pmml notes of older issue are still crnertible into gold, a condition not obtaining for similar currency In any country at war.

Despite the temporary collapse ct American exchange. England's International flnanciil supremacy remains unimpaired. Wherever men trade, from BomMy to Brazil, Hie pound sterling is the iwvlhuu of exchange—Rtill tho worlds financial signpost., and will remain s<». To sum up English soundness, let me quote a famous British 'ina.ir-.rtl authority with whom 1 talked at the beginning of August. He said: "All the available evidence shows that Great Britain, after a full twelve months of war, is just as well off as she was before the wai began, and that she has met the full cost ot {ho war mainly out of the money she would otherwise have saved, out of extra savings, and out of increased income."

CAN ENGLAND PAY. All th : s. of course, lends to I'.'.c pest'rient query: How can England pr-.v the war bill? To answer it >'oii must take toll of her resources, -visible and invisible. You discover thai her financial eggs are no; (.11 in th:: sum-, banker. FI:-n of all Is her grtat a«viim*.ilated wealth, aggregating £18,000.-OOu.Of-0, which Ift t l "» billion,-; greater than Germany's. From this comes her annual income o! C1\400,000,000 as against 'he Teuton yoarlv income or noO.OOO.Oim less.' All' this fabulous foilum could no! be thrown into the war balance, bur ; i shows the reserve behind the British determination to win, even as Mi*. Asci'.uth said the other day: "If it tales the last farthing.'' But the surfare of this wealth has not been scraped.

Britain has always been tin world's hanker, and her foreign in vestments of C4.ooii,ooo.oo'i, yield lug a yearly income cf £2 , ' i.< | .'io.oo to-day. form a. very centre bnlwaiT; Th.ey are safely rani widely distil buted. Nearly half, for example are en the Vmerman coiitincni aloo from the \v;v. Timy are jn cur o\y: i'.ilt-edgcd r.ioroad stocks and bends run In !'out>* Amor'eaj. ra'iroad:-! Onlv 7 peA cev.r.- -'.! on I of cv, i\ £ls rent abroad -is 'n Europe. En;; land iias 'M.iiOO.OOo in Cermnnv The heaviest rred't-'.r among Cm ■ is Russia villi riJL'.OOn.npo. but she is nor losing any si- e, about that obligation. The \.hoheo'eit (if there foreign inve tm.on! is to create n stiong reserve. Th.ey act as antidote now for the colossal war expenditure. Alter ike war ilii ir interest. Hewing back peiiodically, will 1 dp to ogset the inevitable tide of taxation. Nor must, ttic- fact bf over\\r;h>-d that, lighting shoulder to shoulder with the .'dother Country is hei whole enmiie. The dominions over the seas are shedding their Mood freely: iho\ stand n:\i\y to pour out their I roast're too. . amulet* .1 w.aKh \ou mav wt-M add the len billions or (\--mvK Austva!'a, Mew Zealand, s-'omh Africa, ihe Indian Empire, end the ether Crow ;i Colonies and pos.-n - nous which j>i;=dsee an ; ai-va! 'neomr- of over n bitiion pounds, lie: • is some more Zepp.-lin-pror rcsimreo lha! pais substaacn Into tie British pock, fbook. lie: many, icoreover. lias no moie ;'ore : gn colonies and probably will net acquire an: niter the war. Thus she los. s one l»i;' economic prop Imnns'ug as nre these saieguaids of the llritlsh financial integrity. ! Pavo kc '■ for (he hist the om whin): is the determining factor in any r-.ntion's efoi.oin'f de?Mn>, 1 menu her power to save in case o r m-.d. THE |i.\Y CE HECKfiXIX.'i. Will i' be a iv.or England : 'or tie war? r-m;-.em:'-d kingdom. You .aim.)' ,I.| ; ;;1) 'JJ .II iHI .0 <) 0, 'I 0 0 i'.td tl'.e SCii tie lieldM nay mantle with vcv*]:w> ■. i 11! each recurring i'pi inglli.ie, th ,v fact i umii.s Urn' uud' rner-.th the sitiirim irreensv. aid Ins son,. <'■ '•,;: (, ;; r,- ir'.ftil and now lire' n-al 1 ; g. ■!"■ ~„,] (I;.-, f: ;•! ;|| celoiri :'. so- e .. ' j England has m-var known n ■ -•■ j I;t . :! ,I in a smaller \v;;y v itn n- ai" r | the Civil War. when a gp n' ' ' ; ' ( | «.,.,.,I , ~-...-t 1.-. p..p-:laie h n< "■• ' ■"!•- j try. Added to ih.e willing . ::i <■' --.< many men jn 1 aM le, I im-v i'i '• '■'■•'" ■' ivii! nu an a shot laue of v >'r' •■'■'■'' "' all kinds that will greatlv >'■'> ! ! " ] reconstruction.