rnment
now engaged in the war, of providing for a large part of the country's
goods by the mere manufacture of new currency and credit, the
buying power of the pound sterling has been greatly depreciated.
By multiplying the amount of legal tender currency in the shape of
Treasury notes, of token currency in the shape of silver and bronze
coinage, and of banking currency through the bank deposits which
are swollen by the banks' investments in Government securities, the
Government has increased the amount of currency passing from hand to
hand in the community while, at the same time, the volume of goods
to be purchased has not been increased with anything like the same
rapidity, and may, in fact, have been, actually decreased. The
inevitable result has been a great flood of new money with a greatly
depreciated value. Index numbers show a rise of over 100 per cent.
in the average prices of commodities during the war. It is, however,
perhaps unfair to assume that the buying power of the pound has
actually been reduced by a half, but it is certainly safe to say that
it has been reduced by a third. Therefore, the revenue raised by the
Government during the past year has to be reduced by at least a third
before we are justified in comparing our war achievements with the
Government's pre-war revenue. If we take one-third off L707 millions
it reduces the total raised during the past year by revenue to about
L470 millions, less than two and a half times the pre-war revenue.

From another point of view our satisfaction with the tremendous
figures of the past year's revenue has to be to some extent qualified.
The great elasticity shown by the big increase of actual achievement
over the Budget estimate has been almost entirely in revenue items
which cannot be expected to continue to serve us when the war is
over. The total increase in the receipts over estimate amounts to L69
millions, and of this L20 millions was provided by the Excess Profits
Duty, a fiscal weapon which was invented during the war, and for
the purpose of the war. It has always been assumed that it would be
discontinued as soon as the war was over, and if it should not be
discontinued its after-war effect is likely to be very unfortunate at
a time when our industrial effort requires all the encouragement
that it can get. Another L25 millions was provided by miscellaneous
revenue, and this windfall again must be largely due to operations
connected with the war. Fin