War must be paid for on the nail: armies cannot be fed nor slaughtered by promissory notes. Men are obtained by conscription, and money partly by direct taxation and inflation, but mainly by borrowing from the capitalists in spite of the protests of the Labor Party against the exemption of capital from conscription. The quaint result is that in order to pay the capitalists the interest on their loans, the Chancellor of the Exchequer has to tax them so heavily that, as a class, they are losing by the transaction. Robbing Peter, who did not lend, to pay Paul, who did. As the property owners who hold War Loan Stock gain at the expense of those who do not, a unanimous Capitalist protest is impossible. An illustration. But the Labor contention that it would pay the propertied class as a whole to cancel the National Debt is none the less sound. Financing war by “funded” loans. As capital invested in war is utterly and destructively consumed it does not, like industrial capital, leave the nation better equipped for subsequent production. The War Loan, though registered in the books of the Bank of England as existing capital, is nothing but debt. The country is therefore impoverished to meet interest charges on 7000 millions of non-existent capital. There are reasons for not repudiating this debt directly; but as the war produced an enormous consumption of capital and yet left the world with less income to distribute than before, a veiled repudiation of at least part of the debt is inevitable. Our method of repudiation is to redistribute income as between the holders of War Loan and the other capitalists. But as the huge borrowing and confiscation of capital that was feasible when the Government had war employment ready for an unlimited number of proletarians leaves them destitute now that the Government has demobilized them without providing peace employment, the capitalists have now to pay doles in addition to finding the money to pay themselves their own interest. 289 64 NATIONAL DEBT REDEMPTION LEVIES