Such war finance as I have outlined--drastic and impracticable as
it seems--would have paid us. Taxation in war-time, when industry's
problem is simplified by the Government's demand for its product,
hurts much less than in peace, when industry has not only to turn out
the stuff, but also find a buyer--often a more difficult and expensive
problem. There is a general belief that by paying for war by loans we
hand the business of paying for it on to posterity. In fact, we can
no more make posterity pay us back our money than we can carry on war
with goods that posterity will produce. Whatever posterity produces it
will consume. Whatever it pays in interest and amortisation of our
war debt, it will pay to itself. We cannot get a farthing out of
posterity. All we can do, by leaving it a debt charge, is to affect
the distribution of its wealth among its members. Each loan that we
raise makes us taxpayers collectively poorer now, to the extent of the
capital value of the charge on our incomes that it involves. The less
we thus charge our productive power, and the more we pay up in taxes
as the war goes on, the readier we shall be to play a leading part in
the great time of reconstruction.




V

A LEVY ON CAPITAL

_January_, 1918

The Objects of the Levy--Its Origin and History--How it would work in
Practice--The Attitude of the Chancellor--The Effects of the Scheme