labour's claim to higher wages would have been much less equitable,
and labour's power to enforce the claim would have been much less
irresistible.

What the Government has actually done has been to do a little bit of
taxation, much more than anybody else, but still a little bit when
compared with the total cost of the war; a great deal of borrowing,
and a great deal of inflation. By this last-named method it produces
the result required, that of diverting to itself a large part of the
industrial output of the country, by the very worst possible means. It
still, by its failure to tax, leaves buying power in the hands of a
large number of people who see no reason why they should not live very
much as usual; that is to say, why they should not demand for their
own purposes a proportion of the nation's energy which they have no
real right to require at such a time of crisis. But in order to check
their demands, and to provide its own needs, the Government, by
setting the bankers to work to provide it with book credits, gives
itself an enormous amount of new buying power with which, by the
process of competition, it secures for itself what is needed for the
war. There is thus throughout the country this unwholesome process
of competition between the Government on one hand and unpatriotic
spenders on the other, who, between them, put up prices against the
Government and against all those unfortunate, defenceless people who,
being in possession of fixed salaries, or of fixed incomes, have no
remedy against rising prices and rising taxation. All that could
possibly have been spent on the war in this country was the total
income of the people, less what was required for maintaining the
people in health and efficiency. That total income Government might,
in theory, have taken. If it had done so it could and would have paid
for the whole of the war out of taxation.