is done abroad. And it is, necessarily, almost entirely paid
for out of income, that is, out of current production. It is curious
to find that many people still seem to think that the whole cost of
the war has come out of capital. Luckily for us it could not be done,
or only to a very small extent. Our capital mostly consisted of
railways, factories, ships, roads, agricultural land, machinery,
houses and other things that could not be taken and shot out of a gun.
These things we have still got, and though many of them are not in
such good shape as they were, some of them are much better equipped
and organised. We have drawn on our stocks of materials and goods--how
far it is impossible to say; we have lost 8-1/2 million tons of
shipping by war losses; in the meantime we have built, bought and
captured 5-1/2 millions of new tonnage, and we have a claim against
the Germans for such tonnage. On capital account we have suffered by
wear and tear in so far as our upkeep has been neglected owing to lack
of labour during the war, and by depletion of materials and stocks,
and also, of course, by the fact that if the war had not happened,
we should, if pre-war calculations were correct, have put some L1700
millions into new investments at home and abroad during the 4-1/4
years of fighting and some more hundreds of millions during the
after-war period of Government borrowing and restriction on private
investment. But a very large part of the money that went into victory
would otherwise have gone not to capital account but into the pleasant
frivolities, embellishments and vulgarities that made life an amusing
absurdity in days before the war.

If, then, the war sacrifice was made during the war, in so far as its
cost was raised at home, how far is it true that we are now faced with
the business of paying for it? If taxation were equitable it would
only be to the extent that those who ought to have made the sacrifice
and did not, will in future have to pay interest to those who did, or
their representatives. So that the first thing we have to do is to
make taxation equitable, that is, lay it on the taxpayer in proportion
to his ability to pay. There will still remain the injustice to those
who have fought for us, which might be cured, or amended, by special
exemptions. With taxation on a really sound basis no further sacrifice
would be involved by the debt charge, and no diminution of the
nation's wealth or consuming power, which wi