over L700 millions, are not comparing like with like.  The statement is perfectly true on paper, and expressed in pounds sterling, but then the pound sterling of to-day is an entirely different article from the pre-war pound sterling.  Owing to the system of finance pursued by our Government, and by every other Government now engaged in the war, of providing for a large part of the country’s goods by the mere manufacture of new currency and credit, the buying power of the pound sterling has been greatly depreciated.  By multiplying the amount of legal tender currency in the shape of Treasury notes, of token currency in the shape of silver and bronze coinage, and of banking currency through the bank deposits which are swollen by the banks’ investments in Government securities, the Government has increased the amount of currency passing from hand to hand in the community while, at the same time, the volume of goods to be purchased has not been increased with anything like the same rapidity, and may, in fact, have been, actually decreased.  The inevitable result has been a great flood of new money with a greatly depreciated value.  Index numbers show a rise of over 100 per cent. in the average prices of commodities during the war.  It is, however, perhaps unfair to assume that the buying power of the pound has actually been reduced by a half, but it is certainly safe to say that it has been reduced by a third.  Therefore, the revenue raised by the Government during the past year has to be reduced by at least a third before we are justified in comparing our war achievements with the Government’s pre-war revenue.  If we take one-third off L707 millions it reduces the total raised during the past year by revenue to about L470 millions, less than two and a half times the pre-war revenue.

From another point of view our satisfaction with the tremendous figures of the past year’s revenue has to be to some extent qualified.  The great elasticity shown by the big increase of actual achievement over the Budget estimate has been almost entirely in revenue items which cannot be expected to continue to serve us when the war is over.  The total increase in the receipts over estimate amounts to L69 millions, and of this L20 millions was provided by the Excess Profits Duty, a fiscal weapon which was invented during the war, and for the purpose of the war.  It has always been assumed that it would be discontinued as soon as the war was over, and if it should not be discontinued its after-war effect is likely to be very unfortunate at a time when our industrial effort requires all the encouragement that it can get.  Another L25 millions was provided by miscellaneous revenue, and this windfall again must be largely due to operations connected with the war.  Finally, the L15-1/2 millions by which the income tax exceeded the estimate must again be largely due to inflation and extravagance on the part of the Government, which, by manufacturing money, and then spending it recklessly, puts big profits and big incomes into the hands of those who have stocks of goods to sell or who are in a position to produce them.