In the second, we need not be misled by the Jeremiahs who tell us that now that we have won the war we have before us the task of paying for it.  This is not true, or true only to a small extent—­to the extent, that is to say, to which we shall, when all these assets and liabilities have been settled up and balanced, be afflicted with a foreign debt.  Let us leave this question on one side for the time being, and consider what the position really is with regard to that part of the war’s cost that has been raised at home.  In so far as that has been done, the war cost has been raised by us while the war went on.  In fact, all the war cost has to be raised by somebody while the war goes on, because the war is fought with stuff and services produced at the time and paid for at the time.  But when Americans lend us money to pay for some of the stuff that they send us, they pay at the time and we, or our posterity, have to pay them back later on; this is the only way in which we can make posterity pay for the war, and then it only means that our posterity pays America’s.  It is not possible to carry on war with wealth that is going to be produced some day.  The effort of self-sacrifice that war demands has to be made by somebody during its progress—­otherwise the war could not be fought.

That effort of self-sacrifice we have already made in so far as we have paid for our war cost out of money raised at home.  That money has been raised in three ways—­by taxation, by borrowing saved money, and by inflation.  When it is raised by taxation the sacrifice is obvious, and, in nearly all cases, inevitable:  we pay our larger war taxes and so we have less to spend on ourselves, and so we go without things.  A few people raise money to pay taxes during war by borrowing or drafts on capital, but they are probably so exceptional that their case need not be considered.  We transfer our buying power to the Government to be used for the fighters, and so we set free the labour and material that used to go in providing us with comforts and pleasures; our competition for goods is reduced, and so the Government is able to get what it needs out of the nation’s production, which is pro tanto relieved of our demand.  The same thing happens when the Government gets money for the war by borrowing money that we save.  We reduce expenditure, and transfer buying power to the State and diminish our demand on the nation’s production, or that of its foreign supplies.  If the whole war cost had been met by these two methods there need have been little or no increase in prices here, and the cost of the war would have been about half what it has been.  Of the two methods, taxation is obviously the cleaner, simpler and more honest.  By borrowing, the State hires those who have a margin to put part of it at the disposal of the State at a time of national crisis, instead of taking it from them outright.  As most of the taxation involved by the subsequent debt charge falls on those who have a margin (as it obviously should) the result is that the people who subscribed to the loans are afterwards taxed to pay themselves interest and to repay themselves their debt.