deemed advisable to double the income received by the government from taxation, and this was done by greatly increasing the imposts on the incomes of business enterprises and private persons, and imposing special forms of taxation. With $8,000,000,000 secured from taxation, there remained to be obtained from the sale of bonds about $16,000,000,000 in the present fiscal year. This was a task to tax any people, however rich they might be, but the record of Americans in the previous Liberty Loan campaigns left no doubt that they would meet the issue.

We are raising a larger proportion of our war expenses by taxation than are our allies, and we are spending much more money. The total cost of the war to Great Britain from August, 1914, to January 1, 1918, was $20,465,000,000, besides which she had lent to her allies some $6,500,000,000. Of this she has raised 18.33 per cent by taxation. In the same period France spent $20,637,800,000, of which she raised 15.3 per cent by taxation. Italy, in the war up to January 1, 1918, spent $6,077,378,000, of which she raised 11.8 per cent by taxation. Germany had spent, in the same time, $24,129,000,000, of which she raised less than 4 per cent

Selling Liberty Bonds in front of the Sub-Treasury, New York City. "Of the $13,000,000,000 spent by our government in the past year of the war, more than two-thirds was raised by the sale of Liberty Bonds."

by added taxes on her people. As to whether or not it is good policy for us to raise so large a proportion of our war costs by taxation is a question on which there are wide differences of opinion. American business men and the American people have more than met the government half-way in their willingness, both to pay and to lend. It is vital to the success of our army and navy that enterprise be encouraged and that we produce to the limit of our capacity. But too heavy imposts on business tend to a discouragement of enterprise and a curtailment of production. The policy of our government has been to pay the cost of the war out of our present income, as far as is possible, without disrupting business. To secure such a result requires exceedingly delicate adjustment.

Even the securing of one-third of the money needed by taxation still leaves a vast sum to be raised by loans, sixteen times what was required for our government in normal years. But the appeal to the people to show their patriotism by lending their money has in every instance met with a hearty response. The loans have all been oversubscribed. Before the first Liberty Loan was put out there were in

the country only 400,000 holders of bonds. Our government securities were practically all held by the banks. The vast number of our people did not know what a bond was, and the loan campaigns proved themselves of value in the inculcation of lessons of thrift and of finance as well as of patriotism. To the first issue there were 4,500,000 subscribers; to the second, double that number; to the third 17,000,000 Americans subscribed. This means that one person in every six of our population is the holder of a government obligation. An analysis of the figures shows a progressive increase in the number of small subscriptions. Of the first loan 23 per cent was represented by purchases of less than $10,000; of the second, 29 per cent; of the third 47 per cent.

The record of the people, in response to the call of the government to lend it their money, is shown in this table: