Mr Sidney Webb and the Fabians have advocated a system by which the basis of assessment for income tax should be the income divided by the number of members of a family, rather than the mere income without any consideration for the number of people that have to be provided for out of it.  With some such scheme as this adopted there is no reason why the Government should not have taken, for example, the whole of all incomes above L1000 a year for each individual, due allowance being made for obligations, such as rent, which involve long contracts.  For any single individual to want to spend more than L1000 a year on himself or herself at such a crisis would have been recognised, in the early days of the war, as an absurdity; any surplus above that line might readily have been handed over to the Government, half of it perhaps in taxation and the other half in the form of a forced loan.

So sweeping a change would not have been necessary at first, perhaps not at all, because the war’s cost would not have grown nearly so rapidly.  All surplus income above a certain line would have been taken for the time being, but with the promise to repay half the amount taken, so that it should not be made a disadvantage to be rich, and no discouragement to accumulation would have been brought about.  By this means the whole of the nation’s buying power among the richer classes would have been concentrated upon the war, with the result that the private extravagance, which is still disgracing us in the fourth year of the war, would not have been allowed to produce its evil effects.  With the rich thus drastically taxed, the working classes would have been much less restive under the application of income tax to their own wages.  We should have a much more freely supplied labour market, and since the rise in prices would not have been nearly so severe, 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