The New York herald., 1922-10-22

advanced to the dominions. the col
onies and foreign countries paid for
the, foods we manufactured. The
interest which was paid was for our
advantage. 1t was given back to us
in the food and raw materials that
II we purchased from other countries.
II 1t is vital TO our position that we
should maintain our financial status.
We had actually to borrow on
a very large scale. We. lending
country, had to sell our foreign
securities. When the war was
over it was very serious position
/ for the future of this country.
What did we do?
Post-War Problems.
| What didswe do---and this is not
sufficiently understood. There were
two courses open. One was to fol-
low the method that had been fol-
lowed all through the war on the
q continent-to borrow. To go on
! borrowing-you know that kind Of
a concern-but as long as 1t can
! keep on borrowing there is an ap-
pearance of prosperity. k
~ You can spend as you go on
borrowing. You can keep taxation
down if you go on borrowing, but
your credit gets lower. and lower
and lower. and in the end you are
paying compound interest. That
works out in figures, but in your
financial position it becomes more
and more difficult to recover. 1t is,
Of course. easy to go on Borrowing =
| it is the popular course to go on
! borrowing. If we had gone on bor-
rowing there would have been less
! unemployment for the time being,
but there would >have been more
| two, three, four years hence, sand
nobody knows what would have
happened.
That is one course-the popular
and easy course. 1t Is the course
pursued by every. country in the
same position as ours on the contii
nent of Europe. 80.
Budget Balancing Problems.
! What is the next course? A
thoroughly unpopular course-to
| make our budget balance. One way
of doing this was by ruthlessly re-
ducing expenditure. Do you think
| that Is a. popular course? You try
it. daughter Everybody will say
to you: Economics, cut down your
expenses You start and they say:
| oh, it's not convenient to cut that
down.. Then you propose something
else. Another section says: NO.
| you must not cut that down And
the man who proposes it never
comes to your support. If you want
to know something about that look
up the division lists Of the anti
waste party.
They are always making cheap
speeches on economy. But when we
faced the problem and cut some
items down we got into difficulties
with the people who were interested
| in that direction. The anti-waste
| party, was never known there. They
wanted the popular side Of reduc-
ing taxation. and leave to use, tho
unpopular side. (
Finds Economy Unpopular.
Economy is unpopular and when
We were cutting down the civil SER
vice, cutting down the supply de-.
partments everywhere, we had no
end of people in these various
!, spheres who were plncfied and were
affected. 1t was brought home to
us and they knew it Immediately.
while all economists wdfe writing
articles to the Daily Mail. Laugh
| ter.
Cutting down expenses is a DIFF
ficult task and a very unpopular
one. We have done 1t, and don't
you make any mistake. we have had
our cutting down in expenditure
What is the other course? Even
IL we cut down expenditure to the
lowest possible limits the war debts
are so enormous and the costs Of
everything have gone up so much
that the expenditure of the country
Is bound to be infinitely greater
than before the war. What means
that? Taxation Is bound to be put
on the country whatever you do.
Therefore, we had to do two things.
We had to cut down expenditures
ruthlessly, and we have done 1t. and
in order to meet the balance and
+ pay interest on the debt we had to
put up taxation. also unpopular.
Z I'VE are the only people in Eu-
rope who are completely balancing
our budget by raising enough money
to meet expenditures. 1t has been
great struggle.
Cites Exchange DimcuIty.
When. ave started we found the
credit Of the country very low by
comparison with whse 1t was before
the war. One great difficulty was
the dollar. We had to buy cotton
In America. America. received all
the gold in Europe. She was glutted
with gold. America therefore was
in a very prosperous position. Be-.
fore the war you sent to America
S4.S6 for a sovereign. If you had
gone there after the war you would
have got 1920. What meant that?
Everything you got in America,
cotton and food, cost you very
much more because the purchasing
power of the sovereign had gone
down there. BY cutting our war
expenditure, balancing our budget,
saving. our deficiency Of credit In
that country rose and rose and rose,
and to-day our sovereign. instead
OF being worth $500, is s4.47. We
are just beginning to look the dol
lar in the face on equal terms. We