FINANCE OF THE WAR.
Tim public, well informed or otherwise, appears to be settling down into two tolerably safe conclusions,—that the war will con- tinue, and that its expenses will not be entirely met out of current taxation. The money editor of the Times assumes that the bur- den entailed upon us by continued war will amount to not less than 20,000,000/. a year ; though it would evidently be rash to speculate upon so nice a limitation. The last war threw upon this country in the first fourteen years of the century an annual ex- penditure of more than 4,000,000L; and although we may expect that the press will now perform one of its best functions as the protector of a more virtuous economy, we must rely for the prac- tical advantages in warfare very greatly on our wealth, and must therefore be prepared to spend in an accelerated ratio. But on cash principles, or on credit ?—that is the question. Probably on both ; and perhaps it would not be very difficult to determine where the cash will be proper, where the credit.
Permanent increase to our establishments, and any other expendi- ture of a permanent character, will very properly come uuder the head of current outlay. Nothing has been more absolutely esta- blished than the inconvenience, risk, and loss which we have en- tailed upon ourselves by the over-reduction of our military and naval establishments. Possibly the war itself might not have been provoked if England had not given the world too much reason to suppose that she had retired from business in the way of military affairs in Europe ; most certainly we have lost valuable time, and still more precious lives, because we were not prepared to strike the first blow effectually; and the experience of the last two years will prevent, at least for some time to come, all return to the false eco- nomy of such extravagant reductions. It seems within the bounds of possibility, that if the war should last long enough English peo- ple may adopt slightly more martial habits, and that our domestic and resident military institutions may be revived and extended : another source of permanent expenditure, which, with the exten- sion, and improvement of our marine and ordnance, ought to entail a very considerable increase to the permanent expenditure for se- veral years, and that expenditure ought to be met out of current cash.
If any part of the outlay can fairly be thrown on the future, it is that which arises out of the temporary condition of an European war, and which is required for extraordinary military efforts or for any temporary aid to our allies ; and this also we may expect to be so considerable, that the public itself will probably be call- ine° out for measures that would carry us decidedly beyond the 20,000,000/.
That our internal condition is such as to facilitate an energetic money policy, is not less evident. Our City contemporary points to several reasons why the burden should be light in comparison with the former time. In mere numerical proportion, the increase of the population, as the community is not poorer, is equiva- lent to a reduction of the public debt by one-quarter; reduc-
tions in the rate of interest have carried the alteration further— equivalent to the extinction of 30,000,0001. stock ; in 1860 and 1867, by the expiry of the Terminable Annuities, the debt will be reduced. by 110,000,000/. more. The exports in the first eleven months of 1854 fell short of those in the eleven months of 1853 by only two per cent on our gigantic commerce. So much war expenditure as we undertook last year-16,000,0001. in- cluding the vote of credit—had small perceptible effect on the broad results of the money or commercial markets : the ex- treme fluctuations in Consols (IA) were but 1 above the range of 1851 Indeed, the war demands of that year did not equal other claims which have been mere parenthetical items in the budget,--.--such as the Irish famine relief, or the Emancipation gift, both of which amounted to 20,000,0001.; and it has been ob- served that the railway debentures falling due within 1853 were -not less. The war expenditure, therefore, did not exceed a single .item in one department of industry. 'Meanwhile, the commerce .which is to bear these burdens has been widely expanded under the operation of free trade ; and the *Sr itself is tending, directly and by its alliances' to guard and extend the domains of emancipated commerce. Its object is to defend &minor state which has signally cooperated for the advance of free trade, and to curtail the power of that great state which has been and' is the most hostile to freedom of commerce ; while it brings us into the closest relations with France, in a manner that is already bearing substantial fruits for our industry. Irpona very wide view, therefore, we are not only ma condition to sustain the burdens imposed upon us in vindication of'the national faith and honour, but, wisely conducted and wisely, aimed, the war itself may help to provide means for compensating its own expenses, and may be rendered a paying transaction. Look- ing beneath trade to working industry, we find similar signs. Al- though uncertainties have here and there checked industrial ope- rations, the working classes are for the most part well employed. In Ireland, the general rise of wages has been eonstantly noticed. A Country Parson near Colchester remarks, that if wages have risen from 7s. to 12s., flour is now 13s. 4d. a bushel:- but-it must be observed that wheat has declined from 86s. or 90s., the price of September, to 83s., the original price of 1854, with every proba- bility of a further decline ; and Mr. G. A. Grey, an Assistant Drainage Commissioner, writes from Millfield Hill in Northum- berland, that if some of the Country Parson's working neighbours will take a Government train and come to him he will give them employment where wages range from 188. to 24s. If prices stand high, it only shows -that landlord and farmer are making a good thing of it as well as the labourer; and the general spread of con- sumption in the articles of import proves that 1854 has not been materially behind 1853 in the prevalence of comfort Granted, however, that we are in a condition to sustain in- creased burdens' a question Still reniains, how the burdens are to be met ; and if we admit at once that in part they must be met by current cash, we still have to consider whether the resort to a loan will really ease the operation or not. A correspondent of our own has contended„ that as the loan must after all come out of the re- sources of the entire community, the only difference to the entire community between calling it taxes or loan, is that in the latter case we have to pay interest continuously. That would be so if this country produced all purchabeable commodities within its own bounds, or if there were within it no surplus, often seeking invest- ment in schemes far more ruinous than any war that we are likely to 'undertake. It would be true if means were equally distributed, and there were not numbers possessing a floating surplus, while still larger numbers have barely enough to keep their share of the national industry going. By means of a loan, the distribution of capital would adjust itself more deliberately, and according to the innumerable circumstances that cannot be formulated in any dogmatic theory or plan. A loan is the voluntary recruitment of finance, as opposed to an universal system of conscription and drill ; which would supply a given amount of soldiering in a way the most calculated to interrupt commerce and keep the soldiering itself on short coramOns. Bat it does not follow that the plan for raising a loan ought to follow bad patterns; or that because we impose part of the burden on the future, we should impose as large a part as possible. No sound reasoning, moral or economi- cal, can justify such a thing as a permanent debt—it is in its ori- gin and essence an absurdity. There is a middle course between cash payments and pertnanent debt, for which the advances to landlords in improvement have already furnished a moral analogy : but the principle of those advances, like other forms of loan generated in modern times, seems to be the correct one for the case in point—that of providing at-once for the extinction of the capital by direct repayment, the instalments mingled with the interest in the periodical payments.
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