ABSTRACT
§ 1. EVERY modern State needs a rapidly increasing revenue in order to undertake new expensive public services or to improve old ones. Some of these increasing revenues may be got from the annual yield of public properties or services. Where, as in Germany, the State has been the owner of railways and canals, large forests and mines, as well as the postal, telegraphic and other remunerative businesses, the rents and profits derived from these sources may defray in large part the cost of the non-remunerative services, such as defence, police, public health and education. If the British State can acquire upon reasonable terms and operate or lease advantageously our railways, mines, electric plant and certain other services and industries hitherto left to private enterprise, it is possible that we too may derive a large part of our State and municipal revenues from such remunerative sources. But our present situation, in which the Post Office is the only large self-supporting and profit-earning branch of our Central Government, is one which forces us to look to tax revenues as the effective sources for meeting the enormous increase of State expenditure that immediately confronts us. No close forecast of the amount of tax revenue required is relevant to my present task. It may suffice to remind readers that, unless some emergency levy sensibly reduces the burden of war debt, the interest and sinking fund upon our national debt alone will for a good many years to come be nearly double the amount of our total pre-war revenue from all sources. To this must be added a large provision for war pensions, hospitals, land settlements, training schools and industrial equipment for injured soldiers. Large necessary commitments have been made for public expenditure on housing, health and education, roads and afforestation. Unremunerative public works or other contributions towards unemployed insurance, at any rate during the period called ‘ reconstruction,’ will probably form a considerable item of expense. Many of the war ‘ controls ‘ must probably be retained either temporarily or permanently, and all departments of the civil government, enlarged in staff and functions for the duration of the war, will struggle not unsuccessfully against ‘ cutting down.’ Thus the State will remain a much bigger body to support after the war than before. And the expense of keeping it will have expanded almost automatically to meet the rise of prices and the consequent increase in cost of living. For there is no likelihood of such a fall of prices for a long time to come as to bring salaries and wages down to anything approaching the pre-war level. An increased expenditure of 25 per cent, from this source is a low estimate.
