New-York tribune., 1918-06-21

Germany" says w. S. Kies, vice.
president of the American Interna-
tional Corporation, in an address in
which he urges that not moro than
$J;p00,O 100000 be raised, by taxation
this year, and favors, in effect, un-
limited imitation to finance the war,
Indicates that industry has been en-
couraged and that taxes have pur-
posely been made light to stimulate
expansion and increase production"
1t is hard to understand why a
financier of the standing Of Mr.. Kies
should give approval to the financial
policy of Germany, when it is notori-
Gus that that policy is so intrinsical-
ly unsound that 1t has bankrupted the
enemy empire, put her in position
that makes reputation more than
possibility, and is almost certain to
cripple her commercially for an in
definite period after the war. The i'm
plication that Germany has managed
to maintain industrial production for
war purposes because of her policy
of unlimited imitation lis unwar-
ranted. Production of war goods
has been maintained in, spite Of,
rather than because Of, imitation, and
has been made possible by rigid limi-
tations imposed on civilian consump-
ton and by making her industrial
machine practically a part Of her
war machine, under a system that
requires Of every unit in the civilian
population and Of prisoners Of war
constant work at full capacity.
"Why should we pay annually so
large proportion of the expense of
the war;" Mr.. Kies asks. owe are
fighting for posterity and it is fair
that considerable part Of the bur-
den should be born by those who will
profit from the Sacrifices of the pres
ent. If It be considered un-
sound to accumulate debts with an
indefinite maturity, then why not
finance the war as any business con-
Germ would finance a necessary ex~
penditure?" Whether or not we are
fighting the war for posterity, Mr..
Kies overlools a simple fact: name-
ly. that we cannot fight the war with
posterity's money, but only with the
guns and ships and other things that
are produced by the workers Of TO-
day. And the greater the extent to
which the war is financed by infia-
tion, the harder will be the task of
the government to secure the goods
and services required to win the war.
Such goods and services can be made
available in sufficient quantities only
by reducing the civilian consumption
Of them. Taxation forces saving;
imitation stimulates civilian competi-
tion with the government.
Moreover, borrowing by the gov
ernment for war is not comparable
with borrowing by corporation for
its necessary expenditures. AS r.
A. Delano, Of the Federal Reserve
Board, pointed out recently, there
are important differences. "Thus,
when a railway or a mining or
manufacturing corporation or
merchandise undertaking raises
capital" Mr.. Delano said, in dis
cussing this point, sit borrows from
the public to-day with the expecta-
tion of paying the money back from
the accruing profits. In such case,
if the enterprise is successfully ad-
ministered, the public has contrib
uted to it, and so has borne the bur
den as we'll as enjoyed whatever
profits the undertaking may have
yielded. In that case the funds orig
inally contributed are not spent for
goods and services which are there
upon consumed and wasted, but are
spent in creating and developing an
organization which will produce
goods or services for sale to the pub
lie, and which will from the profits
from future sales repay the invest
ors. On the other hand, when ma
tion borrows money from it's people
the money is at once spent for mu-
nitions Of war. for food, clothing
blankets and a multitude of other
things which add nothing to the
wealth Of the nation, and which are
soon consumed"
That is so obvious that even The
infiationists will hardly care to dis,
pute it.