64 HOW TO PAY FOR THE WAR

the amount of money which the public are pre-paring to spend and the value (at the new pricelevel, 20 per cent higher than before) of thegoods available for them to buy. A further risein prices will be required to provide a temporaryrespite; and so on.

Fortunately this is not a complete picture ofthe second chapter of the story. If it were, thevoluntary savings system would not have beensuccessful, and we should be faced with a pro-gressive inflation of prices without limit. Yetthis is not what happened in the last war. Andit is not likely to happen this time, even if wepursue the same policy of depending on voluntarysavings.

What, then, is the actual course of events?The initial rise in prices will relate to goods whichwere produced at the lower pre-war price level,and the resulting profits will belong, as we haveseen, to the owners of these goods. That is tosay, aggregate incomes will indeed rise by £650million (apart from the effect of any rise in theprice of goods bought by the Government), butnot everyone's income will rise in the same pro-portion, if at all. The initial increase of incomewill mainly belong to a limited class of individualsand of trading and manufacturing companies,whom (without intending any insult, for it is byno fault or intention of theirs) we can call forshort "the profiteers." Now the profiteers areliable to a very high rate of taxation, both onaccount of Excess Profits Tax and because manyof them will be rich enough to be liable to a high