New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-08-05
RJOTOUS SPENDERS MUST BECOME
FRUGAL SAVERS TO INSURE THE
SUCCESS OF OUR WAR LOANS
Expensive Flowers, Caudy Raiment and 10Y Riding Are Not
Effective Against U-Boats and Therefore People
Will Have to Give Them Up

gree may be necessary labor, capital
and other essentials Of production
will be diverted into the desired
channels. 1t is, Of course, clear that
this diversion of productive factors
10 governmental uses means almost
to the same degree a lessening Of
those catering to private consump-
ton. A nation that turns a large
part Of its energy into destructive
warfare and into the creation Of all
the implements used therein cannot
produce the same amounts Of goods
for the pleasurable consumption of
its citizens as it did before. This as
pect of war is simply q phase Of the
old adage that "you cannot eat your
cake and have it too"-although We
should have to modify the adage
somewhat to suit the particular
situation and say that "you cannot
throw your cake at your neighbours
head and have it too" In other
words, however we look at the mat
ter, the great need is for much re-
striction of individual consumption
on the one hand and for the highest
intensifcation Of production on the
other.
Profits Plus
Patriotism
Governments employ two ex-
pedients for meeting their wartime
needs-profit and coercion. They
can raise money through taxes and
loans and buy the desired goods in
the market, or they can commander
whatever elements are necessary to
the production of such goods, dictat-
ing their own terms and letting the
consequences be what they may.
Modern governments rely mainly on
the first expedient, although they
tincture it with a little Of the sec
ond by fixing prices and by limiting
profit. II is of great economic con-
sequence in just what proportion
these two expedients are combined ;
but any discussion of bond issues
presupposes, to the extent of such
issues, reliance upon the adequacy
Of the lure of profit, reinforced, per-
haps, by patriotic enthusiasm.
Vast differences in consequences,
however, arise from the different
methods of employing the profit ex-
Incident. There is first the question
/, to whether the money funds that
the government is to offer are to
be raised by taxing the people or by
borrowing from them. This question
has been hotly debated, but it falls
bevond the confines Of this article.
Suffice it to say in passing that the
crux of the question is whether a
mart of the war burden can be
shifted to future generations or not.
It needs no argument to induce
one to see that the fighting and
wealth destruction involved in war
cannot be shifted to the future. They
are going or now. But it does make a
great deal Of difference to those CIV
ing up present income whether it is
given up for good under a system OF
taxation, or whether in payment OF
tond subscriptions it is given up, at
east in part, on an investment basis
which assures return in the future.
Moreover, bonds may be widely sub
scribed in small amounts, and may
induce new saving with little inter
ference with capital normally accu-
mulated for private enterprise.
Heavy taxes. on the other hand,
levied on the restricted classes,
whose savings as a rule supply the
bulk of the capital needed in indus
try, tend simply to lessen these saw
ings, and thus to curtail the capital
needed in industrial development.
But assuming, as our subject does,
a considerable reliance upon bond
issues, several points Of Importance
are involved in the character Of the
bond subscriptions. One point Gen.
tres about the question whether the
bonds are taken by private investors
or, instead, by the banks. The Sec
end concerns a question mentioned
above, namely, whether subscrtp'
tons are broadly made by large
numbers of people, or whether they
are made by relatively small num-
Der of the wealthy.
1t may be rather dogmatically
stated that excessive subscriptions
to war bonds by banks are economi'
cally undesirable. The reason for
this is that such subscriptions can
normally be made only through fur
Their extension of bank credit. While
this puts into the hands of the gov
eminent the needed purchasing me-
dunn, the effect Of its use is simply
to boost the prices Of the things that
tho Government buys. and, subSe-