New-York tribune., 1908-04-13
THE WAR CHEST
Sir Robert Gifen's Pessimism D.
specting the Gold Reserves.
Lonhnn L..

London, Aprn
In the halcyon days OF Cobdentsr, ,b.--"a
was any trouble over the war cnest y,rs-s ~''s
tiOns were confidently expected 20 fan =. IA IA
England under the Free Trade hanna Nd
take up their triumphal march toward -
iennium wars were to cease and --
were to be abandoned as rJIstv ar,t--a
mechanism unsuitable for civilized p-ov-..-1
that blessed reign Of universal peaca %
transcendentaIIsts used to dream thera - -
no need OF war chest in England o- =
other realm OF Industrial workers ana ~
would be no time for borrowing troubIs
it when every nation was preOccupied With -.
ing out it's cheapest products and oua,t =
markets to free impOrts-especiaIIy Rri,iz5 :.
ufactures-and rapidly being enriched ana -
lied. If time were required for the co,v..-,-
OF mankind TO Cobdenism there would Ia
porary war chest for emergencies Thf,
the income tax II was ordinarily n \. 8.
low so as not TO be a serious burden: In, !. -
were TO come Unexpectedly Il could bs aor,,'.
and even trebled. That was the oId-,s.s,.-..
view OF the income tax II was a r.,--v.
Unforeseen emergencies-an enormous ra.,--
for financing a war and carrying II TO 4 s,.-.--
full issue.
Times have changed. ard there Is now ala
ist talk about the necessity for a wa s..
The shilling income tax has become a s.
for ordinary revenue, and there Is 10 resa-v,.,
taxing capacity for a calamitous crisi, -
cuckoo song OF universal brotherhood ha,H.s
away; the cost OF arInaments has steadFv !
creased; preparations for war are mora 49,.
than oldtime campaigning was. and neths- >.
pacific diplomacy OF the King. nor an ari,,..
with Japan nor the entente COrdiale with Fr,,
nor permanent arbitration at The Hagus =
an army reorganized three times since The R,.
war. nor a navy equal 70 the two most po-.
fuI fleets with 10 per cent added is a safsz-,-
against excessive taxation for the maiutsr,,,
OF the fighting services. British prestig, :,
never higher than II is to-day; foreign -.
tions were never more satisfactory; the v-.
is more peaceabIe, with a more neighborly as
ing among nations. than ever before. yet rszr
martinets are constantly CoH1Uring with Il.
nations fears leader writers are creating =,
atmosphere electric with suspicion and ausr
ciers are bOrrowinc trouble about the urEsr.
necessity for war chest as financial rsss-7,
for an unforeseen catastrophe.
Sir Robert Giffen. the eminent statistlaau
has started the financial discussion by an al.
dress before the Royal United Service Insrru-
ton. He has described the abnormal growth !,
AZ
changes. and has asked what would happen
France and Germany, with their allies vsrs
again at wcr or if "the United States a1i
japan. plus a great European power" we-. en-
broiled. or II England were engaged IN couslc,
with Germany, or America, or Russia, with per
/ haps one or two more states joining IN as allies
| OF enemies He has enlarged upon the u1sz-
ampled commotion which would follow ths uu,-
Tar vr+h u7f- --l-z4
liabilities TO runs on banks Withdrawals Of e.
| posits and widespread ruin and BANKRUPTCY
| and has demonstrated that existing a--ans.-
ments for gold reserves are utterly tnstsqua:s
| for meeting so dire catastrophe
| He has estimated the deposits n ths banks :.
/ the United Kingdom as f910OO0000 and taat
/ the whole stock OF bullion in the Bank OF Erg-
land. including both the banking reservs aat
| the gold held against note issues. 5oss nc;
| ceed f400oOOO0. and has shown nat the;s
no other reserve except f12.OOOC00 or f150d0.
| 600 retained IN Scotland and Ireland aga1x
/ paper issues, since the coin IN the other bs1a
/ IS virtually till money After reciting recs1,
| experiences IN America, where the banks started
with about S per cent OF their liabilities IN cash
| and were speedily bowled over. he concludes
| that England is not IN position for facing
! great war and the collapse OF the credit sEs-
/ TEN, which would be the inevitable eject
| Pessimistlc talk OF this sort IS not r.as-
/ slIring TO taxpayers oppressed with the burdens
/ or ornaments. which become ineffective or oo-
1 suIete before there is an opportunity OF testing
| Ineir value in A contest for sea power. Insy
nave been told that their costly feet Is power
/ fuI enough 20 resist any possible combination
| OF naval powers and TO protect their food SUP
plies so that the risks OF starvation viii .
averted in the island kingdom; and now taey
are warned that, powerful as may be these a7-
fensive armaments, they are in no condition III
ID great war because their banks are not aois .
withstand a popular ClamOr for hard cash. saa
/ there are no reserves for protecting the na'0-
against unexampIed financial distur0an''
There must be safeguards against panic N 1 lI1'
square mile known as the city, or It VII =
an idle boast that Britain rules the waves anu
can tackle any coalition OF naval povers-
OF the two proposals discussed by Sir Koo'n
Glffen. a war fund and a greatly Increased s'-
| reserve the latter alone receives practicaI 9o-
| slderatton. There may be special hoarcs uA-
the absolute control OF the German ElnVe~
| and the Emperor OF Russia for the sudden V-'
preak OF war. but these would have TO % 80
! plemented by financial operations on AAs
| scale dependent upon national credit al - J.
/ and abroad. a deposit OF a few rilAons u =
stored in vaults may be useful in derraSils =
cost OF mobilization on the Continent ou' -
is an insignificant detail in comparison VIZ :
war chest for avertfng panic. bankruptcy = =
ruin through the sudden collapse OF ths -
system. What practical inancierS are s4sN-s ;.
that the Bank OF England ought TO have u -.
OF Sir Robert Gifren's estimated t+oV'VVVN :,
gold reserve as large that OF the D@->
France. which is now about t1O0OOoVVV
This would be safeguard not Only iO'
to which England might be suddenly eAso
but also for any outbreak Of hosuhties 49, :.
interrupting commerce and subjectlng tHe T.,
system OF the United Kingdom 70 dsH- =