Abstract
There are three ways in which a government may finance a war or any other emergency: by taxes, by loans, or by the issue of paper money. Each method will have different effects on the economy. Furthermore, the effects of taxes will vary with the kinds of taxes imposed, and the effects of loans, with the sources from which the loans are drawn. It is generally understood today that the present generation cannot shift the burden of the war to future generations by any means of financing. The burden can be shifted to the future only in so far as the creation of new capital is retarded, or existing capital, human or material, is allowed to depreciate. A discussion of the effects and of the relative advantages and disadvantages of financing by taxation and by borrowing is outside the scope of this paper, but will be found elsewhere in this volume. It is here assumed that the debt is not
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