borrowing and too little taxation can have in a community which is
acutely suspicious and distrustful of its Government, and very liable
to ignorant blundering on financial subjects.

What, then, might have been done if, at the beginning of the war, a
really courageous Government, with some power of foreseeing the needs
of finance for several years ahead if the war lasted, had made a right
appeal to a people which was at that time ready to do all that was
asked from it for the cause of justice against the common foe? The
problem by which the Government was faced was this, that it had to
acquire for the war an enormous and growing amount of goods and
services required by our fighting forces, some of which could only be
got from abroad, and some could only be produced at home, while at
the same time it had to maintain the civilian population with such a
supply of the necessaries of life as would maintain them in efficiency
for doing the work at home which was required to support the effort of
our fighters at the Front. With regard to the goods which came from
abroad, either for war purposes or for the maintenance of the civilian
population, the Government obviously had no choice about the manner in
which payment had to be made. It had no power to tax the suppliers in
foreign countries of the goods and services that we needed during the
war period. It consequently could only induce them to supply these
goods and services by selling them either commodities produced by
our own industry, or securities held by our capitalists, or its own
promises to pay.

With regard to the goods that we might have available for export,
these were likely to be curtailed owing to the diversion of a large
number of our industrial population into the ranks of the Army and
into munition factories. This curtailment, on the other hand, might