New Britain herald. [microfilm reel] (New Britain, Conn.) 1890-1976, 1918-04-11
TO MEET
COST OF THE WAR
And Taking Men From Govern
meDt Is Not Proper Course
BY WILLIAM A. SCOTT.


Director Of the Course in Com
merce, University of Wisconsin.
Professor Scott. as the author
of Money and Banking" and
other financial treatises. and one
of the men who helped to shape
the Federal Reserve Banking
Act, is recognized by bankers
and economists as an authority
on money and credit problems.
This was has imposed upon our
nation two gigantic tasks--first, the
selection and training Of an army
and navy of millions Of men; and,
second, their equipment with the food.
clothing, munitions, ships, etc, nee
essary for successful warfare on the
other side of the ocean.
To the second of these tasks there
are two phases, namely, that of trans
ferring to the government a sufficient
portion of our individual incomes to
meet the enormous expenditures in
vo1ved, and the reorganization of our
Industrial activities in such a man.
ner as to insure the production Of war
commodities in sufficient volume and
their delivery to our soldiers at the
times and in the places in which they
are wanted.
plying our government the requisite
funds is indicated by the fact that
according to the best estimates the
aggregate of the annual incomes Of
the people of this country does not
exceed forty billions of dollars, while
our annual war expenditures will not
be less than fifteen billions of dol
lars. It Is, therefore, obvious that,
so long as the war lasts we must
transfer to the government each year
not less than one-fourth, very likely
one-third, possibly one-half, of our
Individual incomes.
From this very stubborn fact there
- no possible escape except by aban-
dontng the war or by reducing our
contribution to 1t in men and equip
ment to such a degree as would re-
suit in it's abandonment by our AL
lies, alternatives to which no red
hlooded American will give a mo-
ment's consideration.
We Cannot Borrow Abroad
The reason why there is no escape
from this uncomfortable situation is
the fact that we cannot borrow from
foreign countries as we have always
hitherto been able to do. The drain
of the war upon our Allies has al
ready been so great that they are not
only not able to make any loans or
contributions to us. but are no longer
bile to supply their own wants with
out our help. Instead of borrowing
from them. we must lend to them.
Domestic borrowing does not offer
a means of escape. It simply enables
some Of us temporarily to pay less
than our share Of the expenses 9TH
ers-the dom este bondhold ers-pay-
| ing more than their share cond1-
! ton of being repaid the excess with
| interest in the future. 1t does not
enable the nation to shift one ounce
Of the burden.
Taxation and loans are the only
methods OF transferring income from
the pockets of the people to the
public treasury. The former involves
compulsion, while the latter is pure
W voluntary. Our government has
adopted a com bination Of these two,
proposing this first year to collect
about one-hfth Of the amount need
ed by taxation and to appeal to us
voluntarily to supply the other four
fiftns in the form Of Liberty Loans
and War Savings
Savings Must Be Increased.
Both of these methods assume that
the savings of the people from cur
rent income will be adequate during
each year to supply the governments
needs, and that means In the present
case that we must at least treble our
normal savings, which, according to
the best estimates, have amounted to
about five billion dollars a year. We
cannot transfer to the government
what we do not possess and If out of
our forty billions of annual income
we continue to spend thirty-five on
our personal consumption, and save
I only five, no taxation or loan system
can put fifteen billions into the pub
: 'ic treasury.
In current discussions Of the rela-
tive merits of the taxation and the
loan methods, 1t is frequently assumed
that the former Is certain to produce
the requisite amount Of revenue; in
other words, that it compels the nee
ossary amount Of saving. But exper-
fence scarcely justifles such a con-
clusion. It is doubtless true that up
to a certain point eople will save In