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War-Time Financial Problems by Hartley Withers
page 50 of 270 (18%)
so far as the money subscribed to its loans is money that is being
genuinely saved by investors this process has exactly the same effect
as taxation, that is to say, somebody goes without goods and services
and hands over his power to buy them to the State to be used for the
war. Borrowing of this kind consequently does everything that is
needed for the solution of the immediate war problem, and the only
objection to it is that it leaves later on the difficulties involved
by raising taxes when the war is over, and economic problems are
much more complicated in times of peace than in war, for meeting the
interest and redemption of debt. But, in fact, it is well known that
by no means all that the Government has borrowed for war purposes has
been provided in this way. Much of the money that the Government has
obtained for war purposes has been got not out of genuine savings
of investors, but by arrangements of various kinds with the banking
machinery of the country, or by the simple use of the printing-press,
with the result that the Government has provided itself with an
enormous mass of new currency which has not been taken out of anybody
else's pocket, but has been manufactured by or for the Government.

The consequence of the profligate use of this dishonest process is
that general rise in prices, which is in effect an indirect tax on the
necessaries of life, involving all the injustice and ill-feeling which
arises from such a measure. It is inevitable that the working classes,
finding themselves subjected to a rise in prices, the cause of which
they do not understand, but the result of which they see to be a great
decrease in the buying power of their wages, should believe that they
are being exploited by profiteers, that the rich classes are growing
richer at their expense out of the war, and that they and the country
are being bled by a set of unpatriotic capitalist blood-suckers. It
is also natural that the property-owning classes, who find themselves
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