New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-11-25
WHO REALLY BEARS
THE BURDENS OF WAR?
Discussion Of Borrowing, Taxation and Initiation in Their
Relations to the Distribution Of the Cost OF the War
Between Present and Future

power is paid to the government a.
the price Of the bonds that it issues.
None of the subscribers resources,
are yet in. These subscribers Oct
interest, and pay interest, and wait
for nothing, having advanced moth.
ing. No bank depositors are SUP.
plying the funds and restricting
their invested resources. CONNER.
cial banks do not lend their deposi.
tors funds or their own cash, but
their own promises. These bank.
are merely renting out their respon.
sibility, letting go not one penny Of
their resources, employing instead
whatever cash they have as reserves
against their expanding deposit liza.
bilities.
Thus, what the government has 10
buy with il gets without any dimu-
milton of the buying power or the
funds or the resources Of the banks.
But the government has received
this fund Of new buying power and
is using it. Prices go up. These
funds in its hands are a net addition
to the currency-so far net in
crease in the money offering itself
for the goods that are not increased
No one having any the fewer dollars
Of purchasing power because of the
supply of new dollars that the gov
eminent has to buy with, each dollar
in circulation becomes promptly
able to buy less goods-which is
merely another way of saying that
prices rise. The governments re.
ceipts Of purchasing power are, then,
achieved through reducing the pur.
chasing efficiency of all the other
dollars in the country-gold, silver,
banknotes, greenbacks, deposit
credits-that existed before the gov
eminent got its new supplies OF
bank-credit currency.
A Consolation in
The Shrinking Dollar
The holders Of purchasing power
at the time the bonds are fosted
make, therefore, the real advances to
the government and thus are the
ultimate bearers Of the present war
burdens. They did not consent. The
thing was not done by them, but 10
them. They did not even know what
or who did it or how or when. Pre-
cisely because this is what forced
loan borrowing always means ard
does, it is always an easy fiscal re-
source. And still it is true that
some of those injured by forced loan
dilutions of their holdings of cur
rency come later to enjoy some off,
set or solace through the fact that,
if they are in debt, they become able
to pay off their obligations in
cheaper, smaller, contracted, wizened
dollars.
But the creditors that lost at the
beginning through the shrinkage OF
the dollars they then had stand to
lose again in the dollars that later
they must receive. II it also hap
pens that these creditors are land
lords, with rights to stipulated lease
hold dollar rents, they lose still fun
Their. If also they are annuitant
or bondholders or preferred stocb
holders or recipients Of fixed salA-
ries or customary profits or rates "A
fare, they are once more buffeoed.
And thus it happens that the gen.
eral burden of forced lending that
was imposed upon all currehsy hold
ers as the first effect If imitation
goes forthwith through process OF
arbitrary redistribu%. thinning
out through various 5ffsets for some,
assembling and .nlckening into a
several-fold injc.>ice for others.
Thus practically all the advan-
tages Of lvzn finance are forfeited
II the rs.keting Of the securities is
done through the discounting actiyi-
tiey or commercial banks.
f. Right methods Of borrowing, no
matter whether taxes might or might
not be better than loans, involve none
Of these i'll effects. The only burden
bearers in the present are the lend
ers, who have acquiesced in their
sacrifices in view Of the terms OF IN
vestment offered them. They bear
what they undertake TO bear and are
paid for bearing it. No one else IS
interested until the time arrives Tor
the taxes to be collected to retire the
bonds. All the relations involved IN
the case, excepting the final one OF
tax burden, are voluntary, and, since
they are contractual, are in this
sense of the term and to this de-
| gree fair.