Lord Simon himself never revealed how far he believed that a sum of this size could be raised from the genuine savings of the people. But, if we are to accept the published views of leading economists, £1,000,- 000,000 may be regarded as the maximum that the: Government can hope to obtain by borrowing from the public and by the realization of gold and capital assets abroad.
On this basis there was already a shortage of at least £400,000,000, even before the recent spurt in expenditure which added a further £800,- 00,000, making £1,200,0000,00 in all. Thus the Government is spending £1,200,000,000 a year more than it is in a position, under present conditions, to bring into its coffers.
In such a situation there are only two expedients by which the Government can pay its way. It must either resort to a wholesale creation of paper money (inflation) or else it must combine drastic increases in taxation with measures to ensure an enormous expansion in the flow of public savings.
The first of these expedients, involving a runaway inflation, would be a counsel of despair. It would mean a rapid and continuing rise in prices, which would dislocate every department of the public and private economy and render all accountancy impossible.
Text read from the printed page and cleaned; old type leaves the occasional error.