sent by Keynes
PAYING FOR THE WAR
Summary of Proposals for a Comprehensive Scheme
1. These proposals are based on the assumption of government expenditure at a rate of £2,750 million per annum; or an excess of £1,850 million over the yield of taxation in the financial year 1938-9.
2. I estimate that £550 million can be found towards this out of capital resources - sale of gold and foreign securities, increased Empire balances in London, sinking funds and depreciation allowances which it is not possible to invest in new plant; and £300 million from current savings, excluding altogether voluntary savings by individuals, namely £200 million from Building Societies, Life offices, undistributed company reserves and the like, and £100 million accumulating in the hands of the Government itself, surplus on the Unemployment Fund, Road Fund, Pension Funds, War Risk Funds and the like.
[I believe that these last two figures are heavily underestimated, and that they might be £100 to £200 million higher between them. This is my principal margin against mistakes in other directions elsewhere in the scheme.]
3. Thus the gap which remains to be bridged is of the order of £1000 million; or £1100 million allowing for the cost of Family Allowances proposed below. I propose that £500 million of this should be raised from the increased yield of new and old taxes. [For I have not yet taken account of increased yield from the pre-war taxes as a result of the increase in the national income, or from the new taxes imposed by the Chancellor of the Exchequer last autumn].
4. There remains £600 million to be found, which presents the hard core of the financial problem. A third to a half of this might be raised by voluntary methods without any assistance from inflation, provided that the public was allowed to consume