that war seriously reduces the available supply of hands, and so sends up one class of wages. In truth, in the beginning of a war in a country not liable to invasion, and not harassed from the first by financial distress, it is difficult to see what class—unless it be soldiers’ wives—suffers economically from the very beginning, and does not rather feel as if it were prospering. Something of this is, no doubt, imaginary, and due to the bustle and interest created by war, and the sense it causes of a necessity for harder work; but most of it has a true economic source. The expenditure is greater, the competition is less, and one new career, rapidly consuming men, has been opened to the discontented. There is more room for those who are not engaged, and more to get, and they therefore feel well-off. So strong is this impression, that in countries where the well-off classes govern—as was the case in England’s war with Napoleon—war is often protracted by their reluctance to lose the advantages which they think, often with reason, they are enjoying, though at the expense of the whole community. It is by degrees that the economic effect of war comes to be felt, through the agency, usually, of taxation. No nation can throw away perhaps two years’ revenue in one on unproductive effort without becoming gradually poorer,—that is, without having less to spend in giving good wages to great multitudes of men. Suppose a war to cost fifty millions a year—and the American war cost £120,000,000—though much of that is spent in wages, the whole is loss, for even the wages are paid, from the economic point of view, for doing nothing. In the best case, that of a country which is annually heaping-up a reserve in the shape of savings, this reserve must be diminished to an appreciable degree; and the effect, _pro tanto_, is as if the community were making less profit, or were fractionally less industrious, or were more addicted to consumable luxuries like tobacco or wine. If the process continues long, or the war is excessively expensive, all saving-power is consumed, and the community sinks gradually to the position of a man who is living from hand to mouth, and making nothing to provide against the future. The process, of course, may be slow; it may be retarded, as in England in the Great War, by the sudden rise of new and profitable industries, and it may be diminished in its effect by thrift; but it is inevitable. No nation could expend a second year’s revenue on war continuously for a century without being beggared; and each separate year must of necessity involve some approach towards beggary. Borrowing distributes the loss over future years; but it does not diminish the loss itself, which is positive, and not to be diminished by any financial arrangement. Borrowing involves taxation, and the effect of taxation in the gross is to impoverish. It is often said, for instance, that England could borrow a hundred millions, and