When war comes there are five ways in which a modern Government can provide itself with the sinews thereof:—
1. It can take money, out of the citizens' pockets and bank balances by making them pay taxes.
2. It can get money from them by issuing loans which they subscribe for by saving.
3. It can borrow abroad.
4. It can get money from banks by issuing loans to them which they subscribe for by creating new credits; or it can get money by issuing loans to people who subscribe not by saving but by borrowing from banks which create new credit for this purpose.
5. It can print notes and issue them itself.
The ideal method is obviously number one. With it, the goods and services needed for the war are bought by the Government with money which the citizens, having paid it in taxes, are unable to spend on themselves. There is thus
