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300 ECONOMIC INQUIRIES AND STUDIES
supposition on the matter. I have heard it said that
an additional saving, equal to 4 per cent., or even less
than 4 per cent., of the aggregate income of the natton
would be an enormous addition to the annual saVings
of the country, and would, in the course of a few years,
have a great cumulative effect. What I must point out,
however, is that there is no ground for believing that
a cessation of the expenditure on armaments or the
cessation of Government exp~nditure of any kind de-
frayed out of taxes would bring with it the saving and
investment of an equivalent amount as capital. On
the contrary, people not paying the taxes would be
able to spend the amount on something else, and it
does not at all follow that the whole amount would be
saved and invested, although a certain small propor-
tion, bearing the same p.t:0portion to the taxation re-
mitted as the present savings bear to the total income
of the country, might be so saved and invested. As a
matter of fact also, it is common knowledge that neither
Germany nor France has been fettered in any way for
many years past by the lack of capital to develop their
industries. The alleged effect of the expenditure on
armaments is thus not merely contrary to theory, but
is contradicted by the actual experience of many
years.
It would be natural to complete this statement by
entering into the statistics of the actual growth of
capital in each of the countries concerned. I have al-
ready had occasion to deal with this matter, however,
as far as this country is concerned, in connection with
the question of our living upon our capital as the result
of the excess of our imports over our exports in inter-
national trade, and it would take us too far afield,
perhaps, to enter into a statistical inquiry with regard
to the other countries I have named where statistics
are not so easily available bearing upon this particular
point of the growth of capital. The importance of
studying the question of the growth of capital, however,
is never to be lost sight of in these discussions .. The