3

WAR  BORROWING

i

THE  PAST
A  careful  historian  of  financial  thought  has  lately
declared  that  there  are  few  economic  questions  upon
which  opinion  has  been  so  divided  and  for  so  long  a
time  as  the  best  method  of  raising  funds  for  the
conduct  of  war. 1  For  two  centuries  and  a  half
statesmen  and  economists  have  debated  as  to
whether  in  time  of  war  all  supplies  should  be  raised
by  taxation  or  some  reliance  should  be  had  upon
public  credit.  In  the  present  war  this  controversy
has  been  waged  with  new  intensity  but  with  old-time
uncertainty.  In  so  far  as  settlement  has  been
reached  as  to  the  adjustment  of  war  expenditure  between ­
  taxes  and  loans,  the  formula  has  been  opportunist ­
  rather  than  definitive.
Curiously  enough,  the  discussion, 2  spirited  and
1  In  W.  R.  Scott’s  admirable  address  to  the  Economic
Science  Section  of  the  Royal  Philosophical  Society  of  Glasgow ­
  on  “Adjustment  of  War  Expenditure  between  Taxes
and  Loans”  (Glasgow,  1917);  reprinted  in  the  same  author’s
“Economic  Problems  of  Peace  after  War:  Second  Series”
(Cambridge,  1918).
2  See,  for  example,  “  Financing  the  War,”  a  series  of  papers
if 1  The  Annals  of  the  American  Academy  of  Political  and
Social  Science,  January,  1918;  also  “Financial  Mobilization