New-York tribune., 1918-06-14
Still Initiating and Contracting

Still Initiating and Contracting
We hope we shall never grow weary of
the bewildered endeavors of our neighbor
"The Times" to understand what it is all
about-this stupid chatter about infa-
tion of credits causing all this rise in
prices and the cost of living and the cost
of the war and the good Lord knows
what else! The President has spoken
sharply and impressively, mincing no
words, showing that
sit makes the whole economic structure
questionable and insecure and the very
basis of credit is cut away"
Secretary McAdoo is still more en-
phatic, saying that if we surrender to
initiation,
with all the evil consequences which
would flow inevitably therefrom, this
would, firmly believe, bring ultimate dis
aster to the country"
Professor Irving Fisher, as president
of the American Economic Association
Professor O. M. w. Sprague, of Hai-
ward; Mr.. Paul NJ. Warburg, of the Fed
eral Reserve Board Dr. A. C. Miller, of
the same board Hon. George E. Rob-
erts, of the National City Bank: Rep
resentative l.. T. McFadden, Of Penn
sylvania - these and no end of others
have set forth in the clearest and most
concise terms exactly the meaning and
consequences Of all this propensity to
finance the war with the equivalent of
paper money, that is to say, Federal Re
serve Bank discounts and expanded
credits generally. But our wearied and
troubled friends Of Times Square are
still striving to apprise themselves Of
what all these distinguished economists
and financiers are talking about. AS
newspaper of much prominence "The
Times" feels called upon to say some
thing, and say it it will, at the most
reckless hazards.
Mr.. Paul M. Warburg has been speak
ing again on the dangers of initiation. the =
unacceptable need of retrenchment in ex-
penditures, and it comedies that:
"As an official Of the Federal Reserve
SYSTEM and as a member of the Capital
Issues Committee, Mr.. Warburg speaks
with an authority beyond mere words
upon a subject uppermost in the minds of
all business men trying to look into the
future"
We had somehow supposed that Mr..
Paul Warburg had acquired his author
ity before he had accepted public Office
and was named to his present position
because of that. No matter
he differs from others who havo dis
cussed imitation in recognizing that there
are dangers also in contraction"
A great discovery "There has been a
terrific contraction" says "The Times"--
"of twoscore billions of credit (of rail-
ways and public utilities). which is a
large offset against such imitation, as
there is
How and why our venturesome friends
do not explain.
"No doubt there is some imitation and
all imitation is deplorable"
But:
speaking practically rather than theo-
retically"
True, too true
Whatever imitation there NAV be on
this side of the ocean is nothing com
pared with that in other countries"
Nothing?
Beyond all question, our bank credits
have shown greater increase than our cur
rency"
But:
"The deposits have grown faster than
the loans"
In other words:
"Our credit imitation reflects. pros
porous trade imitation, not sheer financial
imitation"
Sheer financial imitation" would pos-
sibly be dangerous, prosperous trade in
f1ation" not.
ut is idle to deny that there is inaa
ton"
But:
ut is agreeable to add that it is under
observation and control as never before
in our financial experience"
Witness commodity prices and the cost
of living rising in the last two years at