or its equivalent, while the higher classes waxed wealthier as wars were waged. It is not saying too much to declare that these conditions are directly reversed to

The present struggle is not only costing the upper classes of Europe dearly

in blood but the cost of the war is falling

So much for the internal loans of a Government on March 31, 1914, which is Government. It is only by the process the end of the British fiscal year, stood of some such homely simile that we can at £707,654,101, or $3,500,000,000. Durconceive of the ability of any Govern ing the first two years of the war the ment to pay interest on its war debts, United Kingdom alone, without taking even those of previous wars, which will British colonies into account, borrowed be far eclipsed by the war debts in for war purposes about $12,000,000,000. curred during the present one.

By August 1, 1917, the public debt of War Bonds in America

Great Britain will in all probability have

progressed to approximately twenty Now, the external debt is a different

billions of dollars. Obligations conmatter. The nation which incurs one

tracted by the entire British Empire, knows that no sentiment enters into it.

which includes Canadian, Australian, and It is like a note discounted at the bank; it

Indian loans placed since the war began, must be met at maturity. Moreover, un

are rapidly reaching the imposing total less the debtor nation can sell sufficient

of fifteen billions. goods to the creditor nation to create a

It is obvious that the cost of this trade balance in its favor, it must meet

gigantic struggle is going to superimits obligations in cash, which means gold. Not to do so would mean national dis

pose enormous sums to the present nor

mal national indebtedness of the bellighonor, loss of credit, and most likely war.

erent powers. But it must not be supIn a sense, however, and this point

posed that the entire cost of the war will seems to me to be an important one, a

be financed by increasing the national large proportion of Europe's borrowings

debts. in this country are not, strictly speaking,

England, especially, is making

every endeavor to “ external debts. In the case of the United

pay as she goes."

Taxation is meeting a very large proKingdom, for instance, the only real ex

portion of the cost of the war, the internal debt is Britain's share of the

come tax alone ranging from about 1 Anglo-French loan, $250,000,000. Her

per cent. on small incomes to 4142 per other loans are on collateral borrowed

cent. on large ones. Besides this there from her own people. If I borrow a

are various taxes on business profits, thousand-dollar bond from you to use as collateral for a loan of eight hundred

corporations, &c., and especially the tax

on munitions profits, which must, in the dollars at my bank, I am technically the

end, prove very remunerative. debtor of the bank, but my real debt is to you. Similarly, the British Govern Shifting Burden to the Rich ment's real creditors, in the matter of

Viewing the entire matter from a its secured notes, are those who have

somewhat academic position, it is well loaned their stocks and bonds for col

worthy of note that as civilization has lateral. As a matter of fact the owners

progressed a very perceptible shifting thereof hold the obligations of the Brit

has taken place as regards the burden ish Government, which is obligated to

of warmaking. It is quite evident from pay interest in addition to that which

the study of ancient history, and even of accrues to the various securities. In

feudal history, that the cost of war in the sense that American bankers may

earlier days fell almost entirely upon demand payment of the United Kingdom

the people of the lower social strata. notes when they mature, they constitute

They paid not only in blood but in money an external obligation, but viewing the owners of the collateral upon which they are based as the real lenders to the Government, they are internal. Great Britain's Total Debt

day. Apart from certain so-called contingent liabilities which need hardly be considered here, the total debt of the British

more

it

is

war.

far

heavily upon these classes than such an extent that they may never reUpon the people. For at least a cover, Certain classes of people must decade previous to the war the whole lose financially that other classes may trend of British taxation has been in gain. But all the vast sums which are favor of the people, and this tendency being reckoned on as the cost of war are has been greatly emphasized since the by no means total losses. Much of the

This is in accordance with the money so spent goes back to the people. modern spirit. European democracy is England, be it remembered, has had her willing to fight, but it will not pay. war brides ” and her war-time prosEuropean aristocracy must not only fight perity. We are apt to picture England in but it must pay as well.

our mind's eye as making war so vigorIt would appear that the burden of ously that she has no time for anything future taxation in Great Britain is bound else. It is exceedingly interesting, thereto fall upon the wealthier classes. Under fore, to study the comparison of Great Lloyd George and his associates the Britain's imports and exports for the wealthy had been taught that it is its first nine months of 1915 and 1916, reduty and privilege to obey the rhythmic spectively. These figures are culled from injunction of Mr. Kipling and “Pay! The London Economist of Oct. 14, 1916, Pay! Pay!” During the present con and they do not, of course, include imflict no murmur of dissent has reached

portations of war materials for the use these shores at least, and in the present of British armies in the field. It should wave of patriotism, engendered by the be noted also that the figures given are national crisis, it is scarcely conceivable in pounds sterling, and not in dollars. that any wealthy Englishman would

NINE MONTHS ENDED SEPT. 30. venture to complain when nearly 50 per

1915.

1916. Inc. or Dec. P.C.

Imports. £643,812.337 £704,044,617 +£60,232,280 9.3 cent. of his income is demanded of him

Exports.. 283,091,686 379,328,938 +96,237,252 22.9 in taxes, while his brothers are yielding Re-exp'ts. 75,619,886 76,865,079 +1,255,193 1.6 their life blood in the trenches.

Import The enormous expenditures of a coun

balance.£285,100,765 £247,840,600 – £37,260,163 13.0 try at war may be rather aptly compared

It is natural that we should consider to the losses of a group of friends who

the financial future of the United King“sit in " to a friendly game of poker

dom as the key to the situation so far as with each other one night a week all the

the other two great powers of the Entente year round. If all their losses at these

are concerned. As regards France, there friendly games were added up, the re

is an undercurrent of confidence as well, sult would be rather terrifying to people

based on the known frugality of the of moderate means, but such a compila

French people, the strength of the tion is rarely made. Moreover, the half

French banking system, and the remarkdozen friends who play poker with each

able achievements of that nation in disother weekly usually end the year without

charging the enormous burdens imposed serious financial catastrophes on the part

upon it by the Franco-German war. of a ny of them, and the secret is that they play with each other regularly. The

The Finances of France money which A wins from B and C one The Bank of France, founded by Nanight will, in all probability, find its way poleon in 1800, has long been regarded by back to B and C a week later; and so it financial students as the model national goes.

The chief winner of the season, banking institution. It is, like the Bank perhaps, gives a dinner to his friends, of England, privately owned, though difand th us equalizes matters. No one is fering somewhat from the English bank very much better off for the season's in its relations with the State. playing, and no one very much worse. During the Franco-Prussian war the The Losses Not Nel

bank advanced to the State about $300,is, to a certain extent, in the case of

000,000. This necessitated an increase in a country at war. Certain lines its note issues of some 1,300,000,000 stry must suffer, it is true, to francs. By 1879 the advances of the

So it

of indu