New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-04-16

ernments at war have been bidding for war
merchandise faster than it would be pro
duced; hence the initiation Of prices. The
supply of money has been increased faster
than the supply Of goods.
That brings US TO the troublesome ques-
ton Of price imitation. There are two ways
10 finance war. One is to borrow, the
other is TO take. One is TO sell bonds and
the other is 20 tax. In the beginning the
governments Of Europe resorted at once 10
huge bond issues. partly because it was the
quickest way. War taxes have been rising
since very rapidly. but the main reliance
still is upon bond issues, 10y use Of which
the cost of war is passed on to posterity
instead Of being paid out Of the wealth Of
the present No country has yet been able
to adopt a pay -as-you-go policy Of war
finance.
From the fact that billions Of the Z
provided for in the American war loan
will be represented by short-term, tempo
rary certificates Of Indebtedness, to he paid
off out Of the proceeds of taxation, it ap-
pears that Of our first war budget it is
intended that fve-sevenths shall be left to
nosterity and two-seyenths found out of
pocket That is a fair proportion. There
were those who urged that the whole
amount should be provided by taxation;
others thought it should be raised entirely
ON bonds. This difference Of opinion is
everywhere the same, and is in some meas
IRE theoretical. Postcrity itself is kind
of fiction. !. has no definite beginning or
end. The crowd is continuous Taxation
will provide for a sinking fund, 10 doubt,
10 apply on the principal Of the bonds, 50
that repayment actually will begin at once.
In the placing Of war loan the degree
Of monetary initiation will be governed to
some extent by the manner in which the
bonds are bought. a popular loan, such
as this is intended to be, produces less in
fation than one placed with banks, because
in one case people put their money into
the loan instead Of spending it on goods
for their own consumption. which is thrift,
whereas in the other case the banks expand
their credit to absorb the loan and nobody
curtails his or her own personal eX-
penditures. Most Of the foreign war loans
placed in this country in the last two and
a half years-roughly 2i2 billion dollars
nave been absorbed by the banks, and bank
credit has been enormously expanded TO
correspond. The more Of the American
war loan that can be placed with people
having small sums to invest down to $50
each. the better. The bill passed by the
House provides that the Secretary of the
Treasury shall sell the bonds. so far as
possible, to the people direct, and that the
remainder may be disposed Of in any other
way. which means that what the people do
not buy will have TO be taken by bankers
1t will be the first popular government
loan offered in this country since the Civil
War. The possibilities of subscription are
very great. Nobody knows how great
they are. The Secretary Of the Treasury
is said to believe that the whole Of the
loan will be taken by the people. 1t might
be. 1t should be. But that is not the end.
The production Of food and merchandise
must be enormously stimulated and saving
must become fashionable. Billions on end
to the sky will not win the war. Only food
and ammunition and guns and ships which
people produce with their hands can do