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round; and the supul tends to become smaller. Nevertheless the supp! && nearly at its maximum as the circumstances of the labor market admit; if it is not, that is a matter for the Board of Agriculture, the Food Control Denartman, and the other organisations set up by the Government send to. The point that I wish to emphasise & every increase of the currency sugments spending pacity. By doing so, it stretches st. eisst demand and gives an upward pull to prices, to which there is no check because supply is extremely inelsson. Corrersely, every reduction of the currency would è mans ending capacity, slacken an elastic žemsně sně sllow prices to drop, supply remaining in its former rigid condition.

The immense quantity of additional gold imported by she United States during the war is by no means an amed dessing to that country. The cost-of-living gredient has assumed alarming proportions there, as well

Furope; and it is possible that America might be g to relinquish part of her gold if she were satisfied Sac à reduction of the cost of living would follow. A 1 of 100,000,000l. paid in gold to the Allies would substantially reduce America's currency and lower general grices On the introduction of this gold into Europe it would, of course, be necessary to cancel a more than equivalent amount of paper money, in order that the desired object of reducing the currency and lowering prices in Europe also might be achieved. The adoption of such a measure would greatly benefit the general public both in Europe and in America; and, as the cost of all materials for carrying on the war would be reduced, the rate at which debt is being accumulated would be appreciably checked.

WALTER F. FORD.

Art. 5.-SOME ECONOMIC LESSONS OF THE WAR.

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ABOUT three-quarters of a century ago, a fierce campaign was conducted by the liberal and idealistic French press of that period against a Minister who, in addressing a meeting of electors, summed up his whole political platform in the words: Work! Save! Get rich!' I freely admit that, in normal times, so materialistic a policy responds but poorly to the idealism which lies at the heart of all free peoples. But the times in which we live are not normal, and it will be long before they become so. For my part, I must say plainly, even at the risk of incurring the same opprobrium as did M. Guizot, that, at the present moment and at the moment when peace is reestablished, there can be no duty more imperative, no duty more sacred, than that of adding to the material prosperity of one's country.

Particularly do we feel this in France. It is our duty towards the families who mourn such irreparable losses, to lead them back to the cares and occupations of everyday life and to preparation for the future which awaits our country. It is our duty to the survivors of those armies to whom we owe so much, to find immediate employment for them on their return to civil life. It is a duty each one of us owes to his country, to place her, as soon as possible, in a position to pay off the heavy debts which have been contracted for the prosecution of the war. Finally, it is laid upon us as a moral obligation to rally the hearts and minds of all to the one purpose in pursuit of which it will be possible to secure a continuance of that national unity which has been evoked by the war.

The difficulties in our path will be numerous and formidable. One need be neither economist nor financier to understand how deep and lasting must be the aftereffects of such an upheaval as that in which we share to-day. Can we believe that the production of wealth will be recommenced to-morrow under the same conditions as in July 1914? We, in France, know only too well that it cannot. The industries of our invaded territories and of Belgium have been destroyed; they have been systematically plundered by the enemy. A long time must elapse, vast sums will have to be expended,

before those once prosperous industrial regions can resume their normal activities, again equipped with the machinery of production.

But let us suppose this first part of the task accomplished. We shall still require the raw materials of life and industry before we can begin to manufacture. Let there be no mistake, the war has caused a terrible wastage of such materials; and, if there are some which human activity can replenish almost at will, there are others which must wait upon nature itself, and are necessarily limited in their output. Such are timber, wool and foodstuffs. Thus, in the reestablishment of our industries, we shall be faced by a difficulty in procuring certain raw materials, and especially in procuring them at a reasonable cost. There will be a still further difficulty in regard to the supply of labour.

I do not know-and if I did, I could not divulge-the number of our workmen of all categories who have fallen on the field of honour and have thus been struck permanently off the roll. But in addition to these, who must certainly be counted by hundreds of thousands, there are those who have been wholly or partially disabled, many of whom will be obliged to seek other employment because they have lost an arm or a foot or an eye, and are thereby precluded from the exercise of their former callings. Moreover, those who have not been killed, who have not been disabled, will come back into civil life with a sense of grievance which it will not be easy to dispel. For after all they have endured, after three years of perils and sacrifices, they will have the right to expect special consideration and treatment; yet they will find in the factories, behind the lines, men and even women who, in consequence of the great and pressing requirements of national defence, have become accustomed to earning wages appreciably larger than the average rate earned before the war; and there will undoubtedly be a bitter dispute between Management and Labour as to whether the war rates of wages are to become the minimum of the future scale.

Thus it is certain that producers will have to face heavy disabilities. Nor must consumers imagine that the peace will bring back the conditions which they enjoyed before the war. In the first place the incomes

of many among them will be reduced, partly because the concerns in which their money is invested have suffered by the protraction of hostilities, and also because the time will come when the expenses of the war have to be paid; and, as the State possesses no other income than the amount which it deducts by taxation from the incomes of its citizens, it is the bulk of the citizens who will, in fact, pay the expenses of the war, less the proportion-I hope a considerable one-which

compel our enemies to pay.

At present the people of France do not feel this burden, for in this respect our policy has differed from that of our Allies. For over two years we were spending millions on millions without the Government demanding a single centime of taxes additional to those paid before the war. Only at the end of 1916 did they at last bring themselves to levy additional taxation, and then only on a very limited scale. But the time will come when the debts contracted, both at home and abroad, must be paid; and it is the French people who will have to pay them. Thus the consumer, with his diminished income, will most certainly not enjoy his former margin of expenditure; neither expenditure on luxuries, nor even savings, will be on the old scale.

Finally, the means of distribution will be profoundly affected. The wastage of shipping-not only in France but in all belligerent countries-is far beyond all that can be done to keep pace with it in repairs and new construction, now that the shipyards are absorbed by naval requirements. The protracted war will leave the mercantile marines of all the belligerents in a state of exhaustion. Freights will therefore remain high. The railways will be in similar case. It is only to be expected that they will raise their rates, for the price of coal and the wages of the workpeople have alike risen to such a level that they will otherwise no longer be able to make ends meet.

Yet another obstacle to the free circulation of wealth will doubtless appear in the shape of heavier and more extensive tariffs. Till lately we have been taught that there were free-trade countries and protectionist countries, and that the protectionist countries were placing obstacles in the way of the free exchange of goods by the imposition

of more or less arbitrary fiscal dues. But I have no hesitation in saying that after the war tariffs will be universal. In some cases the States which have taken part in the struggle will look to their tariffs for the means of alleviating the burden of direct taxation. Others will look to them as the means of protecting not only their old-established industries, but all those new industries which have been created during the war and which it is necessary to encourage if we are to realise the universal desire, manifested even in Great Britain, to ensure the economic independence of the Entente Powers as against the Central Empires, as a corollary to the preservation of their political independence against a repetition of the furious and barbarous attack of which they have been the victims.

It follows from all these considerations that we shall find ourselves face to face with a new world, a world in which the economic interests of the producer, of the distributor, of the consumer will be completely dislocated, will have passed beyond the range of the habits, the formulas, the systems to which we have been accustomed. They will be in a state of anarchy; and anarchy of interests is war.

How, then, shall we meet the challenge of this new world? What are the essential conditions of success in the struggle which lies before us? A big volume would be needed even to suggest solutions of all the problems with which we are faced at this moment. The economic question, as it presents itself to-day, touches every phase of national life. It touches alike the educational system and civil legislation, the fiscal system and the relations of capital and labour. All that I can do here is to attempt to disentangle two or three fundamental ideas, two or three guiding principles which must be grasped in good time if we are to solve the problems presented to us. These principles are of two kinds: those which affect the eventual treaty of peace, and those which relate to internal reforms. I will deal first with those which relate to the peace. But in order to understand rightly what manner of peace is required, we must first endeavour to understand what the war itself is.

If we can but rid our minds of all the side-issues

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