How will the ending of the war affect public finances?
Generally speaking, postwar governments will have to solve
three financial problems: (1) termination of war finance,
including both war expenditures and war revenues; (2) re-
construction finance; and (3) settlement of war debts.

Of these problems, the termination of war finance is prob-
ably the least disturbing. Everybody, with the possible
exception of a few munitions makers, will agree on the ne-
cessity of reducing military expenditures. Similarly, abol-
ishment of wartime taxation will be popular. Still, it can-
not be expected that war finance will terminate upon the
armistice day. At that moment, many orders for fighting
equipment may be outstanding; even if they are canceled
at once the government will be obliged to compensate pro-
ducers for outlays which they have already made. Hence
payments in liquidation of war orders may well continue
for some months and even years; so will compensation pay-
ments to owners of requisitioned equipment; and expendi-
tures for the upkeep of the armies (which are gradually be-
ing disbanded) and for the care of war veterans.

The wartime sources of revenue may be considered in-
dispensable for the financing of these expenditure items.
Furthermore, the lagging of state revenue behind taxpay-

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