6 
MONEY 
receipts, and now that the wicked banks have * put 
on the screw,” buyers are obliged to hold off, and 
they themselves, ‘though perfectly sound,” owing 
to the impossibility of getting sufficient accommoda- 
tion, have difficulty in carrying on their business on 
the scale to which it has risen. Pessimism succeeds 
optimism, and the upward slope of prices in which 
the predominant desire is to spend money on goods 
and services, is succeeded by a downward slope in 
which the predominant desire is to sell goods for 
money. 
In a war the situation is different. It is then not 
private persons and institutions, but the government 
which starts the rise of prices by profuse undertakings 
to buy goods and services without much thought 
of how the expense is to be met. When the bills 
begin to come in, the revenue, augmented as yet, 
if at all, only by small additions, is quite inadequate 
to meet the additional payments. A private person 
or institution without realizable capital in analogous 
circumstances is obliged either to borrow, even if 
the terms be what he calls “ ruinous,” or to go into 
bankruptcy. Bankruptcy in such circumstances is 
clearly of no use to a government: a government 
has to continue in business. A government which 
appeared secure and was expected by its subjects to 
win the war, could probably always borrow as much 
as was needed, if it were willing to pay the necessary 
price, which would be a very high rate of interest 
at first, but one which could be reduced by reborrow- 
ing at lower rates after the war. Governments, 
however, are afraid to offer good enough terms. 
They think it will encourage the enemy if they have 
to pay even only double what they had to pay for 
loans in time of peace. The “ business community,” 
or so much of it as borrows from banks, terrifies it 
with stories that if it gives high interest the rates