THE SUPPLY OF CAPITAL1
How will the measures so far proposed affect the supply of capital?—How far can the rich be taxed?—Functions of the private investor—The choices open to him—Large and small investors—The effects of redistribution of incomes on the investment market—And on State borrowing—Income and 'capital appreciation'—Can the latter be taxed?—Is the flow of capital rightly directed between industries?—Or between industrial and other claims?—Types of investment—Fixed and circulating capital—'Free' capital and 'sunk' capital—Do banks create credit?—How bank credit affects the flow of capital—The relation between credit and capital—The international flow of capital—Will high taxation restrict the supply of capital?—Why men save—The importance of business reserve funds— The 'national savings' analysed—How British industry is financed— Should business reserves be taxed more highly?—Need for increased reliance on reserved profits for the financing of industry—Policy of the National Investment Board as borrower and lender—Need for economy in the use of the available supply of capital—Development of State Savings Banks and of Municipal Banks—The case for the nationalisation of insurance—Increased wealth as the key to an abundant supply of capital —The future of taxation under Socialism.
It is perhaps time to pause and consider, in their cumulative aspects, the effects of the economic measures proposed in the foregoing chapters. The detailed discussion of their immediate cost must be reserved for a later chapter, when we have before us not only the financial demands of the policy of economic reorganisation already put forward, but also the cost of other social services, such as education, and when we are able to set against these any possible economies in the national Budget, and especially in military and naval expenditure and the service of the National Debt. Here we need only observe that two of the measures already suggested—the direct use of the unemployed____________________