ie to 
lving 
alise 
e act 
the 
CREATION OF ARTIFICIAL PURCHASING 
POWER 
For a belligerent state to conduct war from the very first 
moment with the utmost possible energy is always 
regarded as a matter of the highest principle. Money 
must be found at any price. To procure out of taxes 
means for carrying on war is, as a rule, at any rate to 
begin with, out of the question. One must feel thankful 
if the proceeds of taxation prove sufficient for ordinary 
State expenditure. Generally speaking, direct taxes have 
to a large extent to be written off, or their payment post- 
poned, while the returns from indirect taxation, and 
particularly from customs, diminish, owing to the im- 
possibility of getting commodities into the country, or 
of carrying on the home production of taxed commodities 
on a normal scale. Nor, in fact, can the issuing of a 
real State loan be calculated upon at the very outset. 
It requires extensive preparations, and even if these 
should have been made in advance, still the appalling 
economic disruption brought about by mobilisation must 
in some way be overcome, before one can expect success 
for any considerable State loan. The old theory that 
an accumulated amount of funds in gold could form a 
basis for financing the first period of a war has been 
definitely demolished by the experience of the World War. 
Purchasing power, however, must be placed at the 
disposal of the Government, and in a modern community 
this can always be done at once, and to an unlimited 
extent, by increasing the amount of bank currency— 
9