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debt. There is no current source out of which the payment of this interest can be made, except the incomes of other members of the community. Now, if the war debt were held by all classes in some approximate proportion to their incomes, this might not matter. But, as we have seen, war conditions enabled the war profiteers to supply the vast majority of the loans. Of the £7,400 millions held here in State securities in 1920, only £567 millions were held by 'small investors,' and of these a large proportion would not be workers. The hard times of last year again have greatly reduced the amount held by small investors. At the end of the depression virtually the whole of the debt will be held by the well-to-do classes, forming a considerable reduction in the proportion of the current income of the nation available as purchasing power for the working classes. If this is the result of our war finance, it applies far more severely to most other belligerent countries, whose war expenditure was defrayed far more largely out of inflation, unless the permanent adoption of lower monetary values effects a proportionate cancelment of debt.

War finance in a word, it would thus appear, has considerably aggravated the maldistribution of income which is the source of trade fluctuations, unemployment, and the political and economic maladies which flow from these conditions. But in Great Britain, as in most other modern states, progressive methods of direct taxation of incomes and inheritances go far to redress the balance. The increasing proportion of tax revenue, taken from the higher un-