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Series 2/ Pamphlet Ao.//. 
 
 gcague of Jfret |lation0 ^00actntton, 
 
 22. BUCKINGHAM GATE, S.W.I. 
 
 THE^FINANCIAL ASPECT ^ 
 A LEAGUE OF NATIONS 
 
 By HARTLEY ^WITHERS 
 
 (Editor of the " Economist,'' and one of the Leading 
 Authorities in this Country on the subject of Finance). 
 
 MAxNY people think of a League of Nations as a 
 beautiful idealist's dream, most pleasant to realise 
 if the world were all quite different, but not yet a practical 
 problem within the range of everyday consideration. In 
 fact, it is not only practical, but so practical that if we 
 do not make it also practicable everyone of us will feel 
 it in pocket and in spending power. 
 
 When people think about finance they usually do so 
 in terms of money and sums of money. From this point 
 of view the financial aspect of a League of Nations 
 resolves itself into the question. How much shall we 
 save in money if we have a League? In other 
 words. What will the National Budget come to when 
 the war is over, if peace simply brings a return 
 to the old conditions of hostile nations or groups 
 of nations, maintaining armies and navies on a 
 much greater scale and very much more expensively 
 equipped than they were before 1914? The answer, of 
 course, is a matter of guesswork, but there can be no 
 doubt that the saving will be enormous if the institution 
 of a League, with every nation contributing its quota 
 to an international police force, solely for the purpose 
 of keeping the peace, enables us to restrict our expendi- 
 ture on armaments at least to something like the figure 
 that they absorbed before the war. Even in that case 
 the balancing of the peace Budget will be difficult 
 
 ivi302117 
 
enoug"h. Last April, Mr. Bonar Law in his Budget 
 speech made an estimate of after-war expenditure of 
 650 milHons, on the assumption that the war ended by 
 March 31st next, and that it would be enough to add to 
 the previous expenditure of 173 millions (apart from debt 
 charge) 50 millions for pensions, and 47 millions for 
 normal growth and "other expenses for which some 
 allowance ought to be made." The debt charge he 
 estimated at 380 millions. These estimates were criticised 
 at the time, both inside and outside the House of 
 Commons, as much too optimistic. Among other things, 
 they assumed that half our loans to Allies would be good 
 assets, and that we should, immediately after the war, 
 begin to receive interest on this half in full. This seems 
 to be a very doubtful assumption. When we think how 
 r^cverely most of our Allies to whom we have lent money 
 have been crippled by the war, it is highly unlikely that 
 they will be able to make any such effort for some years 
 to come. Mr. Sydney Arnold, who criticised the Chan- 
 cellor of the Exchequer's figures with damaging force, 
 pleaded for an immediate addition of 70 millions to 
 taxation, and made an estimate of after- war expenditure 
 of 720 millions. 
 
 All these figures and estimates, however, were based 
 on two assumptions : first, that the war will be over by 
 the end of next March — and no one can say that that 
 is certain, or even very probable; and, secondly, that our 
 after-war expenditure on armaments will be at something 
 like the old peace-time level. If there is no League of 
 Nations this will certainly not be so. If the end of the war 
 brings us merely back to the old conditions of international 
 diplomacy, based on the forces behind each nation, then 
 it is clear that we shall need a Navy much more powerful 
 than we had before, and an Army expanded to the 
 Continental scale, both of them equipped w[th all the new, 
 deadly, and costly apparatus that has been developed 
 during the war, and will be multiplied and " improved " 
 by continually more costly inventions in preparation for 
 the next great struggle. How many hundreds of millions 
 a year is this process going to cost the taxpayer in this 
 and other countries? Even without it we have the 
 prospect before us of a peace Budget three and a-half 
 times as big as it was before the war, on the assumption 
 that peace comes in six or seven months. That huge 
 addition is much less formidable than il looks, because 
 the greater part of it is due to the increased debt charge, 
 
which will involve, in so far as the debt is held at home, 
 only a transfer of income within the nation. However 
 the" debt is dealt with, whether by levy on wealth or by 
 annual taxation, it is as certain as anything can be about 
 the future of taxation that the charge involved by the 
 debt will be laid chiefly on the shoulders of the well-to-do 
 classes, who will also be the holders of the greater part 
 of the debt. The debt charge will thus chiefly involve 
 an exchange of payment from well-to-do taxpayers to 
 well-to-do debt-holders. It will not affect t"he total of 
 the nation's income, wealth, or production, unless the 
 taxation is so ill-arranged that it cramps industry. 
 
 But it is quite otherwise with the charge involved by 
 the gigantic expenditure on armaments that will be 
 necessary unless mankind is saved by a League of 
 Nations. Money spent on the debt charge by the 
 Government does not set anybody to work, apart from 
 the small amount of labour enjoined by it upon the tax- 
 gatherers and the clerks who send out the dividend- 
 warrants. A., the taxpayer, pays over money to B., 
 the debt-holder, transferring to him so much command 
 over the amenities of life, the volume of which is not 
 thereby altered. But when the taxpayers have to raise 
 hundreds of millions of money for Army and Navy and 
 Air Service, then all the money so spent goes into 
 materials and labour which would otherwise be used for 
 the increase of man's power to enjoy the good things of 
 life. If there is no League of Nations, then an enormous 
 amount of men's power over the forces of nature will be 
 devoted to fashioning them into weapons of destruction, 
 to be used with results that one cannot even imagine 
 when the next war happens. As in all other questions 
 of finance, it is not only a question of finding money : 
 the question is, What is done with the money? As usual, 
 if we leave out the money and think of the problem in 
 terms of goods and service, it becomes much clearer. 
 Finding the money for armaments after the war, if 
 there is no League of Nations, will be difficult enough. 
 Finding the goods and services that will be necessary 
 to equip and man our fighting forces on the necessary 
 scale will only be possible by reducing the supply of them 
 that would otherwise be at our disposal for the ordinary 
 purposes of life. Because goods and services cannot 
 be multiplied indefinitely. They depend on the amount 
 of stuff, work, and brain power that we can put into 
 turning them out. The more of that stuff, work, and 
 
brain power that g-0€s into keeping up and improving 
 our means of offence and defence, the less there is for 
 giving- us good things to support Hfe and improve its 
 conditions. Every ton of steel that is used for building 
 warships or guns, the less there is for making merchant 
 ships, railways, and bridges; every horse that is used for 
 dragging guns means a horse less for ploughing the 
 earth ; every man that is learning bayonet exercise is a 
 man less for growing food or making things that we 
 need ; every scientific expert who is perfecting explosives 
 and making .them more deadly is using brains and energy 
 which might have increased the world's power to support 
 more people in comfort and happiness. 
 
 Mankind is only just beginning to find out how great 
 is its power of production. The question that it now 
 has to settle is whether that power is to be used to 
 produce weapons of death, while the greater part of man- 
 kind is still stinted in its command of the necessaries and 
 decencies of life, or whether a great step forward is taken 
 in the production and distribution of good things. In 
 other words, are we to continue war's privations on an 
 increasing scale, with mutual destruction as our goal, 
 or are we to make a beginning in progress towards a 
 civilisation that shall be worthy of the name? The 
 answer depends on the success or failure of the effort to 
 form a League of Nations. 
 
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 " The League of Free Nations 
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 22. Buckingham Gate, S.W. 1 
 
 Edited and Published by Mr. W. L. Williams, Press and Propaganda 
 Secrete- ry of The League of Free Nations Association, at their Head 
 Offices, 22, BuckiuEjham Gate, London, S.W.I; and printed by The 
 National Press Agency Limited, at Whitefriars House, Carmelite Street, 
 London. E.G. 4. 
 
ivi302il7 
 
 THE UNIVERSITY OF CAUFORNIA LIBRARY