There seem to be two distinct ways of answering the first of the questions I have noted. They do not necessarily contradict each other. Of course the war is being largely paid for immediately out of the accumulated private wealth of the past. We are buying off the “hold-up” of the private owner upon the material and resources we need, and paying in paper money and war loans. This is not in itself an impoverishment of the community. The wealth of individuals is not the wealth of nations; the two things may easily be contradictory when the rich man’s wealth consists of land or natural resources or franchises or privileges the use of which he reluctantly yields for high prices. The conversion of held-up land and material into workable and actively used material in exchange for national debt may be indeed a positive increase in the wealth of the community. And what is happening in all the belligerent countries is the taking over of more and more of the realities of wealth from private hands and, in exchange, the contracting of great masses of debt to private people. The nett tendency is towards the disappearance of a reality holding class and the destruction of realities in warfare, and the appearance of a vast rentier class in its place. At the end of the war much material will be destroyed for evermore, transit, food production and industry will be everywhere enormously socialised, and the country will be liable to pay every year in interest, a sum of money exceeding the entire national expenditure before the war. From the point of view of the state, and disregarding material and moral damages, that annual interest is the annual instalment of the price to be paid for the war.
Now the interesting question arises whether these great belligerent states may go bankrupt, and if so to what extent. States may go bankrupt to the private creditor without repudiating their debts or seeming to pay less to him. They can go bankrupt either by a depreciation of their currency or—without touching the gold standard—through a rise in prices. In the end both these things work out to the same end; the creditor gets so many loaves or pairs of boots or workman’s hours of labour for his pound less than he would have got under the previous conditions. One may imagine this process of price (and of course wages) increase going on to a limitless extent. Many people are inclined to look to such an increase in prices as a certain outcome of the war, and just so far as it goes, just so far will the burthen of the rentier class, their call, tat is, for goods and services, be lightened. This expectation is very generally entertained, and I can see little reason against it. The intensely stupid or dishonest “labour” press, however, which in the interests of the common enemy misrepresents socialism and seeks to misguide labour in Great Britain, ignores these considerations, and positively holds out this prospect of rising prices as an alarming one to the more credulous and ignorant of its readers.