National Savings

High taxation with a sinking fund is, therefore, a forcible contribution to the national savings. For example, the Liberal Industrial Enquiry reported: "The proposal of the Colwyn Committee that the Sinking Fund should be increased to Lica millions per annum would, therefore, obviously—although apparently burdensome on taxa tion—greatly increase the national resources for investment purposes. If they merely have the effect of increasing the volume of British loans abroad, it is doubtful whether the game is worth the candle, but if they are really available for the development of home resources then the apparent extra burden might easily be offset by increased productivity." The third source is the aggregate of the very numerous accumu lations of small sums put aside by the working classes. The improved standard of life and the social provision made for special circumstances of distress and for pensions, etc., have given greater free margin than formerly existed for small accumulations by way of the Post Office, National Savings Certificates, Indus trial Insurance and Building Societies. The situation created by the war in the scarcity of houses has brought about, almost com pulsorily, a new practice of house-ownership.

Taxation and National Saving.

The chief cause, inimical to high accumulation of capital, is the heavy taxation on the higher grades of income and estates. Nothing is here said as to the justice, viewed merely as a taxation burden upon the indi vidual, of such progressive scales. In the past a very large part of the total savings came from the unused wealth of the rich.

It has been said that the 19th century tacitly acquiesced in the great disparity in the distribution of wealth, on the understanding that the very wealthy did not use their money but "turned it in" again for the benefit of the community. If very large sums are absorbed from the relatively few wealthy for distribution amongst the many as pensions and for other social purposes, then the duty of accumulation cannot be discharged to the same extent by the few, but devolves upon the many. Sir Josiah Stamp has said : "On grounds which can be well defended, very large sums are taken from the higher incomes. The effect upon the range of net incomes of the nation is that they are much more evenly distributed than they would otherwise be. But the top portion of a big income used to contribute materially towards saving. To-day you take away that top portion for taxes. The great mass of the people benefit by this system, for, if it did not exist, they would have to bear a greater proportion of the national expenditure and have a smaller net income." The Liberal Industrial Enquiry agreed that the pressure of taxation had reduced the savings of the rich and well-to-do far more than it had increased the savings of wage-earners "so that the amount annually available for investment has decreased by something like 15o to 200 million L." Savings certificates reached

some 475 millions, including accumulated interest, by 1926. Post Office Savings Bank deposits rose 116 million I in six years; co-operative capital increased by 57 millions in 12 years; Friendly Societies 47 millions in 13 years; Industrial and Provident So cieties by 135 millions, and Building Societies 84 millions in years. These figures indicate a contribution of from 8o to ioo millions a year from small investors and it is notorious that the average holdings in big industrial concerns are very small, and that the working classes are extending their interests in industry.

National Savings in Germany.

Dr. Helfferich's computa tions for the years immediately before the war, 1908 to 1913, led to an estimate of 8 to 81 milliards of gold marks (L400 to 425 millions) as the annual national saving. A variety of estimates have been made, some of them rather arbitrary. Prof. Prior (Kreditpolitik-Aufsiitze and Reden) gives 3 to 4 milliard marks in 1924 and 1925; Prof. Hirsch (Magazin der Wirtschaft), 5 mil liards for 1925; the Frankfurter Zeitung, 71 milliards for 1926 and 9 for 1927; the Reichskreditgesellschaft, 6.4 for 1925, 6.3 for 1926 and 7.6 milliards for 1927. The hypothetical character of these estimates must be emphasized.

See: Report of the Colwyn Committee on Taxation and the National Debt ; Report of the Liberal Industrial Enquiry ; A. L. Bowley and J. C. Stamp: National Income 1924 (1926). (J. S.) In estimating savings for any period of time, it is necessary to distinguish carefully between gross savings and net savings. Dur ing a year, a man having a $10,000 salary might save $4,000 and put that sum into an unwise investment the value of which dis appeared before the end of the year. In this case, his net saving would be zero, although his gross saving was $4,000. Assuming that the value of the money unit is constant, net saving is meas ured by the change between the beginning and the end of the period in the excess of assets over liabilities. This statement applies with equal force to an individual, a corporation, or a nation. There are two logical ways of measuring national savings: ( ) Take the sum of the net individual savings of all the inhabit ants of the nation. (2) Take the increase in the physical, institu tional, and mental wealth of the nation, plus the increase in the value of its claims against other nations.