RISING COST OF WAR

Southland Times, Issue 24881, 22 October 1942, Page 5

RISING COST OF WAR

BRITAIN PAYS OUT £12,750,000 DAILY . (8.0.W.)- RUGBY, October 20. In moving a supplementary vote for a credit of £1,000,000,000 for the war, Sir Kingsley Wood, Chancellor of the Exchequer, first welcomed the visit of Mr Henry Morgenthau, United States Secretary of the Treasury, who stood very high in the councils of the United Nations. The new vote of credit, said the Chancellor, would make a total of £4,000,000,000 this year and £12,050,000,000 since the outbreak. Since September 9 the average daily war expenditure had gone up by £500,000 a day and was now £12,750,000 daily, including £10,500,000 for the fighting and supply services. The Chancellor said the credit now asked for, together with the balance remaining from the £1,000,000,000 voted in September, should last until February .It was possible that we had now passed the period of striking increases in the rate of war expenditure, but this did not mean that the problem of financing the war on sound lines would take an easier turn or that we could relax any of our efforts. On the contrary, as the war progressed and we exhausted the accumulated nest eggs and other capital sums available for investment, we had to use other means of replacing them. In this still greater savings from current income and still greater economies in the absolute avoidance of all wasteful expenditure must take a high place. A decent and proper standard of living was obviously essential, but if we insisted on spending for spending’s sake instead of saving to the greatest extent possible we would endanger our sound economic structure. HIGHER TAXATION

Comparing the half-year ending September 30 with last year the Chancellor said that although the expenditure was higher by £350,000,000 the amount we had to borrow was £70,000,000 less. This was partly due to the receipt of £155,000,000 on account of the Canadian Government’s generous contribution, but mainly to the higher and unprecedented level of taxation. The revenue was doing very well, both absolutely and by comparison with last year. The total volume of personal savings was increasing quarter by quarter. Sir Kingsley Wood announced the decision to make the supplementary issue of certificates in January at a definitely lower rate of interest. The purchase price would be £1 in value and it would increase to 23/- after 10 years. Mr Arthur Greenwood (Labour), said we were entering the fourth year with little cause for dissatisfaction at the financial position. The total expenditure in the period 1939-42 was about two and a-half times as great as 191417, but the amount raised in taxation was four times as much, representing 40 per cent, of the expenditure, compared with 21 per cent. Moreover, the average rate of interest on the increase in the debt so far in this war had been only 2 J per cent., compared with 5 per cent, for the last war.