to be raised direct from individual incomes with skilful differentiation, according to the circumstances of the taxpayer, in the matter of the number of his dependants, and also according to the source of the income, whether it is being earned by exertions which illness might terminate or received from invested funds, and therefore beyond the reach of the “slings and arrows of outrageous fortune.”  That portion of the tax that is required for Sinking Fund might be made payable, at the option of the taxpayer, in Government securities at prices giving some advantage to the holder.  This form of special debt-charge super-tax would enable the ordinary income tax to be reduced considerably at once.  Mr Edward Lees, secretary to the Manchester and County Bank, has put forward a scheme by which taxpayers can buy in advance immunity for so many years from so much annual income tax.  If this suggestion could be worked it might provide a means of quickening the debt’s repayment, though it looks rather like exchanging one form of debt for another.  But, in any case, it is urgent that the long promised reform of income tax should be set in hand at once, so that it may be purged of its present inequities and anomalies and set to work in peace to redeem debt on a new and more scientific basis.

XVI

THE CURRENCY REPORT December, 1918

Currency Policy during the War—­Its Disastrous Mediaevalism—­The Report of the Cunliffe Committee—­A Blast of Common Sense—­The Condemnation of our War Finance—­Inflation and the Rise in Prices—­The Figures of the Present Position—­The Break in the Old Relation between Legal Tender and Gold—­How to restore it—­Stop Borrowing and reduce the Floating Debt—­Return to the Old System—­The Committee’s Sane Conservatism—­A Sound Currency vital to National Recovery.

Among the many features of the late war (how comfortable it is to talk about the “late war"!) that seem likely to astonish the historian of the future, perhaps the thing that will surprise him most is the behaviour of the warring Governments in currency matters.  It is surely, a most extraordinary thing after all that has been thought, said and written about monetary policy since money was invented that as soon as a great economic effort was necessary on the part of the leading civilised Powers, they should all have fallen back on the old mediaeval dodge of depreciating the currency, varied to suit modern needs, in order to pay part of their war bill, and should have continued this policy throughout the course of the war, in spite of the obvious results that it was producing in the shape of unrest, suspicion and bitterness on the part of the working classes, who very naturally thought that the consequent rise in prices was due to the machinations of unscrupulous capitalists who were exploiting them.  It is even possible that the historian of a century hence may ascribe to this cause the beginning of the end of our present economic system, based on the private ownership of capital, for it is very evident that we have not yet seen the end of the harvest that this bitterness and discontent are producing.