The problem of the proper use to be made of the nation's savings presents at the moment no difficulties for us; it is solved by the fact that vue Government has come into the market as a borrower on a large scale. The great additional expenailure on armaments has to be met, and the question of ways and means is gravely exercising the minds of all engaged in commerce and industry, no less than the mind of the Chancellor of the Exchequer. We shall agree that the method we want to see adopted is the one which in the long run will be best for the country. 1 remember that, when in 1915 it was my lot to go to the Exchequer, one or my first duties was to receive a very important deputation of bankers ana merchants of the City of London who came to press upon me the need for an increase of taxation. I was fully in accord with their opinion, and in the autumn of that year introduced a second budget increasing taxation heavily. I mention this to show that the spirit of sacrifice is not wanting in our people when an emergency clearly confronts them. The willingness to do the right thing is not in question; the problem is how to raise the requisite resources without injury to our total national production.
The choice lies between additional taxation, borrowing, or something of each. If labour today were in full employment I should, for my part, unhesitatingly lay the emphasis on taxation. But when there is very considerable unemployment, ques. tions arise which may lead to a aifterent conclusion. New taxation disturbs industry for the time being by reducing the demand for goods of widespread consumption, or at any rate by creating a belief that there will be such a reduction in the near future. Orders are withheld and employment is consequently diminished. In a condition of full employment the labour.so displaced might readily be absorbed, but when we have already nearly two million people unemployed we must be care-1ul not to add to their number, The additional expenditure by the Government ought if possible to be so directed as to bring into productive activity men and women who are now out of employment. Taxation will not help in this respect; borrowing, on the other hand, under existing conditions will stimulate employment, and as the demand for labour grows industrialists will be forced ultimately to draw from the pool of unemployed. The limit to this policy is obviously reached when all labour employable. at a profit at the current rate of wages i ged, but we are a long way from that condition at the present time.
Text read from the printed page and cleaned; old type leaves the occasional error.