New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-05-02
Tuesday, Nay I, 1917

American participation in the war
is not likely to cause any important
decrease in the aggregate turnover
of business. On the contrary, there
is good prospect that the volume Of
trade will increase, as greater eff
cheney is attained under the spur of
national necessity. 1t does not fol-
low, however, that business will go
On AS before. Readjustments of con-
siderable proportions arc inevitable.
When the United States entered the
war practically the entire industrial
plant Of the country was working at
capacity, as it had been for many
months, in the effort TO supply for
eign demands and those of domestic
consumers as we'll Therefore, only
a small part, if any, of the goods
needed by the Federal government
for war can he furnished through a
further speeding up Of production.
But the war demands of this govern
ment and Of its allies must be given
precedence over the demands of pri-
vate consumers, and consequently it
seems certain that the latter must
do with less in order that the coun
try's chief business, war, may be
conducted with the maximum of eff
cheney. In other words, a good part
of the productive machinery must be
diverted to the manufacture of war
goods, instead of peace goods.
This, in turn, cannot fail to cause
some dislocation of industry, though
no one can say just how great the
disturbance will be. That, as the
National City Bank of New York
points out in its monthly circular, is
a matter of opinion, and opinions
differ widely. Discussing the point,
the bank says:
The differences of opinion are not
over the probabilities of slack bust
ness or unemployment, but as to the
extent of the readjustments which
will be necessary in order, first, that
$1,000, 100000 of money and credit
may be placed at the disposal of the
government, and, second, that ST.
100000 worth of commodities and
services may be supplied to the gov
eminent and its allies. A cup can
not be filed more than full, and
while some further development of
efficiency is always possible, the labor
supply is limited and already fully
employed. Moreover, it will be re-
duced by enlistments, in the course
,, Of year, perhaps, by a million or
two million men. 1t would seem to
be obvious on the face Of things that
the requirements Of the governments
can be met only by curtailing sales
to private parties; and it would seem
to be no less obvious that if this
amount Of purchasing power is taken
from individuals they will be per-
force obliged to curtail their pur-
chase, the sum of these influences
tending to throw business into new
channels.
II is true that so much Of the gov
eminent loans as is placed at the dis
posal Of our allies may be consid-
cred as in part providing for a con-
tinuance Of purchases, but the s4,-
000,000,000 estimated to be expended
by the United States represents new
requirements. 1t is probable, also,
that the purchases of our allies in
this market will be limited only by
our ability to provide the credits.
Furthermore, in thinking Of indus
trial capacity in terms of value, it
must be considered, that prices are so
abnormally high that values repre-
sent very much less in quantities
than they usually do. Also, it must
be remembered that industrial ca
pacity has increased very much in
some industries in the last two years.
OF vital importance is the efficient
handling of the governments huge
financial operations. There is no
reason to doubt that if intelligently
planned loan of $7000,000,000 can
be foated with relative ease. But
the effects on the business situation
depend to a considerable extent upon
the way in which the funds are
raised. There are, the National
City Bank points out, four methods
by which subscribers may provide
the means of payment; first, by put
ting boarded cash into the loan; sec
ond, by checking against bank bal
ances; third, by selling securities,
and, fourth, by borrowing from the
banks. All these methods will un-
dcubtedly be employed in some de-
gree, but untitled deposits and
rev bank credits must produce the
bulk of the funds. 1t is feared that
subscribers will resort too freely to
the use of bank credit, in conse-
quence Of which imitation will become
even more pronounced than it is at
present. The bank continues: