ADOPT PUBLIC SAVINGS PLAN, HANSEN SAYS

Due to the enormous sums being spent today, the problem of financing the war is unprecedently difficult to solve, stated Alvin H. Hansen, professor of Economics at Harvard, in a forum lecture Wednesday afternoon under the auspices of the War Service Committee.

According to Hansen, all the countries in this war have planned their financing better than in the past. In other words, less inflation has been rampant. For example, the United States at this time in the last war was the victim of great inflation, but the condition today is not so serious.

The problem of war finance in a nut shell is to mop up the excess income over and above the income used to buy consumers' goods. For example, in 1941 there was a gross product of 110 billion dollars, out of which 75 billion dollars were spent for consumers goods. The resulting 45 billion dollar excess was taken care of through taxes and savings. For the fiscal year of 1942 the excess has been estimated to be 80 billion dollars.

A war program, according to Hansen, can be financed by taxing and by borrowing. A maximum number of taxes are necessary in war in order to avoid a tremendous war concentration of wealth.

Hansen favors the recently adopted public savings plan in England, whereby a portion of a man's wages is deducted to purchase bonds. Under this plan people do not pay inflated prices for their limited supply of consumers goods. Hansen believes that the enforced savings after the war will promote business activity and prosperity.

Although some observers believe that resultant potential purchasing power after the war would present danger of inflation, Hansen believes that due to the enormous productive capacity of modern society, no such inflationary danger would exist.