New-York tribune., 1918-08-18
@ Wealth Markets and Commerce

Statistics just published by the
Federal Department Of Labor Sta
tistics show in q striking way the
results of the Russian policy of
financing the war by unlimited in
.fation. The unskilled laborer who
got wage of from 81 to n cents
a day in July, 1914, received $4.l2
in August, 1917. Skilled machinists
who earned from 80 cents to 81 a
day before the war were worth
nearly IS after three years of pre-
posterous currency and credit infla-
ton. The average advance in the
wages Of workers in eight trades
approximated 400 per cent. But
that is only part Of the story, for
commodity prices climbed to even
more fantastic levels as Russian
currency cheapened and confidence
in it evaporated. Meat rose from
400 to nearly 800 per cent in price;
clothing, 900 per cent; shoes, 1,700
per cent, and so on with everything
from pleasure to housing. 1t was
an impossible situation and col
lapse was sooner or later inevitable,
even if there had been no other con-
tributing factors. 1t is from this
view that we recommend the study
of the figures, for they carry les
son for this country the importance
of which cannot be overestimated-
q lesson that Is clearly presented in
an article in another column by one
of Americas foremost economists.
'rg Russia should afford an example
extreme, no doubt, but most illu-
minating-" says Professor Daven-
port, "of the dangers Of financing
war by methods of currency infa-
ton. There was-there still is-no
difficulty with Russia's resources,
her margin Of available surplus
product to maintain war-though
she probably attempted to make her
armies overlarge for her powers
of maintenance. But once her
money was discredited, her me-
dium of exchanges and of payment,
all her resources became unavail-
able-and they remain so. For her
to have borrowed through bonds
marketed by bank inf1ations, had
this been possible in Russia, would
have somewhat extended her period
of endurance. But the limits are
none the less inexorable. No finan-
cial policy can meet the endurance
test that commits the blunder Of
piling up Indebtedness or the blum
der Of pyramiding prices, or COM
lmits both blunders at once in the
guise of bonds foated through bank
G. limitations.
"Nor, in fact, is there any bor-
rowing method that promises the
utmost possible civil contribution to
the burdens Of war. Patriotic lend
ing or low-interest lending or any
lending at a rate of interest, no
matter how high, that still leaves
the option not to lend must fall
short of transferring to the govern
rment all that the citizen can get
along without"
There is, as Professor Davenport
states, no limit to Americas powers
Of endurance in the war. Indus
trial and economic exhaustion are
impossible. But there is a limit to
current income, and 1t Is certain
that we must adjust ourselves to
that limit and rely not on credit
n imitation but on production and
self-denial." In no other way can
the danger Of financial disaster be
averted. After sixteen months Of
participation in the war, the gov
ernment is still relying on exhorta-
: -tion to save the labor and materials
required for war, but everywhere
there are evidences of extravagant
spending; saving by one class is off
set by the improvidence of another.
But labor and materials must be
saved, no matter what the political
effects Of compulsion may be. Dras-
tic taxation on consumption is one
way of bringing it about.