War financing for peace & prosperity: how war bonds help speed victory, check rising prices, insure post-war prosperity: facts and discussion questions

              H OW the war is financed is of 
         close personal interest to every tax- 
         payer and citizen. Good finance 
         measures can help speed victory and 
         secure the Four Freedoms. 
          It is the purpose of this booklet 
         to provide concise reference infor- 
         mation to aid those who want to 
         study or discuss the various aspects 
         of War Finance. 
          
         Questions and Answers 
         on War Financing 
          
          PATRIOTISM is a good basis for 
         buying war bonds; but patriotism 
         plus an understanding of the ele- 
         ments of war finance is a better 
         basis. Informed bond owners aren’t 
         fooled by Axis-inspired rumors — 
         and are much more likely to hold 
         their bonds, both now and during 
         re-conversion. 
          John Q. Public never used to con- 
         cern himself much with “economics.~~ 
         He wasn’t interested. Now, how- 
         ever, he is. Every aspect of war 
         financing affects the value of his 
         earnings, the value of his savings, 
         the amount of his taxes, and our 
         chances for early victory, a lasting 
         peace and postwar jobs for all. 
          The following basic facts and dis- 
         cussion questions are suggested for 
         use at forums, quiz contests, debates, 
         round-tables, luncheon meetings, ra 
         dio interviews, and social studies 
         classes. Some of the topics may sug- 
         gest subjects for newspaper edi- 
         torials and features. 
          
          
         How much can we afford to 
         spend for war? 
          
          The United Nations have been 
         fighting for their rights to continue 
         to exist. 
          “Tell us what you need, and we’ll 
         vote the money” was Congress mes- 
         sage to the Armed Forces in 1941. 
          “If you can get it produced, we 
         can get it paid for somehow,” was 
         the Treasury Department’s promise 
         to the President. 
          The formula was simply: 
          (1) Cut out every non-essential 
         activity. Get every acre, every mine, 
         every piece of machinery, and every 
         worker producing to the limit. 
 
          
 
 
 
 
 
          (2) Set aside just enough to feed 
         and clothe the home-front. 
          (3) Send the rest to war. Pay 
         whatever it costs. 
          
          
         How to raise $100,000,000,000 
          $100 billions a year seems to 
         represent about the limit of our abil- 
         ity to produce for war. It has been 
         said that what we can produce we 
         can somehow pay for. But how? 
         Here’s the present plan: 
         Uncle Sam needs 
          this fiscal year---$99,000,000,000 
         He will raise 
          through taxes ---$46,000,000,000 
         He will have to meet 
          a deficit of     $53,000,000,000 
          
          It is sometimes said that borrow- 
         ing enables us to postpone part of 
         the cost of the war. This is mislead- 
         ing. If we could get weapons on 
         credit from another country or an- 
         other planet, we might indeed post- 
         pone part of the cost of the war. But 
         as it is, all we postpone is the task 
         of dividing up the cost of the war— 
         deciding who pays how much. 
          
         Objectives of present war 
         finance 
          
          The following principles are basic 
         to any sound War Finance Program: 
          (1) Our normal domestic economy 
         should be kept running smoothly, 
         and war industries in particular 
         should be given every encourage- 
         ment to produce a maximum in the 
         shortest possible time. 
          (2) The morale and unity of the 
         American people should be promoted 
         and not impaired. 
          (3) Inflation must be prevented. 
          (4) The nation should be strong 
         and united after the war ends. 
          
         National income, gross national 
         product and income payments 
          
          The term “national income,” 
         much used in time of peace, can be 
         misleading in time of war. The more 
         useful term is “gross national prod- 
         uct.” 
          Gross national product represents 
         the gross total of all goods and serv- 
         ices produced in the economy valued 
         at market prices. (Calendar 1943: 
         $187 billions.) 
          National income is the net product 
         of the economy’s activity; and repre- 
         sents the gross national product less 
         the amount of wear and tear on ex- 
 
          
 
 
 
 
 
         isting plant and equipment, and the 
         amount of taxes paid by business to 
         government. (Calendar 1943: $148 
         billions.) 
          Income payments consist of all 
         income distributed to individuals 
         whether from productive activity and 
         included in national income or from 
         relief and social security payments 
          
  Prepared by Education Section, War Finance Division, U. S. Treasury Depart- 
                         ment, Washington 25, D. C.