If, then, capital can only be created by saving, how far will the war have helped towards its more plentiful production?

Here, again, we are faced with a psychological question which can only be answered by those who are bold enough to forecast the state of mind in which the majority of people will find themselves when the war is over.  If there is a great reaction, and everybody’s one desire is to throw this nightmare of war off their chests and go back to the times as they were before it happened, then all that the war has taught us about the production of capital will have been wasted.  But I rather doubt whether this will be so.  Saving merely means the diversion of a certain proportion of the output of industry into the further equipment of industry.  The war has taught us lessons which, if we use them aright, will help us to increase enormously the output of industry.  So that if these lessons are used aright, and industry does not waste its time in squabbles over the sharing of its product, its output may be so great that a comparatively smaller amount of saving in relation to the total output may produce a larger amount of capital than was made available in days before the war.  There is a further point, that the war has taught a great many people who never saved at all to save a good deal.  It was estimated before the war that we in this country were saving about four hundred millions a year.  This figure was necessarily a guess, and must be taken for what it is worth.  There can be no doubt that the amount of real saving now in progress, voluntary, owing to the patriotic effort of people who think they ought to restrict their own consumption so that the needs of our fighters may be provided, and enforced through the action of the Government in taking taxes and inflating the currency, is very much greater than it was before the war; probably at least twice as much when all allowance has been made for depreciation of the currency.  Some people think that this saving lesson will have been learned, will have become a habit, will continue and will grow.  If so, if people save a larger proportion of their income than they did before, and if the total output of goods is increased, as it easily may be, it becomes at once evident that there is a possibility of a freer supply of capital for industry than has ever been seen.  But in looking at this hopeful and optimistic picture, we must never forget that it can only be painted by those who are prepared to leave out of the canvas all the danger of industrial strife and dislocation, and all the danger of reaction to the old habits of luxurious spending which are so strong a possibility in the other direction.  The war has shown us how we can, if we like, increase production, reduce consumption, and so have a larger margin than ever before to be put into providing capital for industry.  Whether we really have learned these lessons and will apply them remains to be seen.