d. The answer to this question is
very simple, very obvious, and very dull. Capital can only be created
by saving.

Saving is such an entirely unpopular virtue that it seems at first
sight a disastrous conclusion to arrive at, that if we want to
increase the supply of capital it can only be done by stimulating
this unattractive habit; and there is a further question to be
asked--whether it will be necessary or desirable to have a great
increase in the supply of capital. As was pointed out above, one
theory of after-war needs maintains that the world will be so
exhausted by this great struggle that it will have no enterprise and
no energy left, and that capital will go begging. If this be so, we
need not trouble to inquire as to whether the supply of capital can be
made plentiful. But I venture to think that this view is very probably
wrong, though it is very dangerous to prophesy concerning the purely
psychological question of the state of mind in which the citizens of
the warring Powers will end the war. It is, however, at least
probable that the prices which are then likely to rule will stimulate
enterprise all over the world; that every one will see that there is
a great work to be done in getting industry back on to a peace
basis, and a great profit to be made by those who do this work most
successfully, and that the demand for capital is likely, for some
years at least, to clamour for all that can be produced.

To go back, then, to the statement that only by saving can capital
be created. The man who saves, instead of spending money on his own
enjoyment, hands it over to some company or Government to be spent on
some industrial or national purpose. When it is put into industry
it builds a factory or a ship or a railway or a canal, or clears a
wilderness for cultivation, or does one of the innumerable other
things which are necessary for the production and transport of the
goods which mankind enjoys. And it is only by this process of handing
over buying power, instead of using it for our own amusement and
enjoyment, to others who will use it for furthering production that
the tools and equipment of industry can be multiplied.

Something can be done by banks and financiers in supplying credit in
the form of advances and acceptances; but this method is only like
oiling the wheel of industry, the real driving power of which has to
be saved capital. Creating credits simply means that a certain amount
of buying power