New-York tribune., 1918-04-30
Thrift ir, SeZE-Defence
Saving Alone Can Control the Race Be-
t.ueen Fictitious Wealth and Price Initiation
By Hon. Paul MI Warburg
Vice-Governor Federal Reserve Board

the amount of "things" on the one side
of the ledger, thereby keeping their price
down and consequently decreasing the
amount of new dollars to be issued in pay
ment. BY saving we release labor and
render possible increased production, and,
finally, by absorbing the loans through saw
ing we render unnecessary the creation of
new dollars with which to carry govern
ment securities by means of increased bank
credits, unless, indeed, we wish to carry
the whole load by taxation, which, however,
again must be met by savings
1t becomes clear, therefore, that infla-
tion is fundamentally not banking ques-
ton, but question of saving, and that
if wish to avoid the evil conse-
queEces of imitation, and if we want to
avoid a policy of the extremist kind of
taxation we must accept the only alterna-
tive 4-conscientious sacrifice of all unneces-
sary comforts and 1uxuries and a volun-
tary lending of the resulting savings to the
government.
Frills, Begone!
Saving and economy in the use Of nom
essentials bear very directly on another
phase of the question. The credit that the
government secures by selling is bonds is
of value to the government only to the
CroQlC
procure the goods and services which it
and our allies need for the successful pros
ecuton of the war. Twenty billions Of
dollars are of no to the government if
goods and services be secured only to
the extent of three billions of dollars. We
must therefore do everything in our power
directly or indirectly to release both goods
and labor for the purposes for which the
government needs them. Whoever uses or
buys anything, as Hartley Withers says,
makes somebody work for it," In other
words, to use or to buy anything is to use
services, labor and material which, to the
largest possible degree, ought to be placed
at the disposal of the Allied governments
Whether it be food, coal, wood, steel, cloth,
labor or transportation, the result in all
cases is the same. Whoever competes with
the government by freely satisfying his
own desire is a factor in driving up the
price of goods and labor and a clog in the
wheels of transportation. To that extent
he makes himself directly responsible for
the consequent delay in carrying out the
governments programme. X is little diff
hcult for any one clearly to appreciate that
the purchase of frocks and frils may be
the direct cause of the loss of life on the
hrlng lines but the fact remains that the
millions of individual demands at home are
responsible for delays which mean tha pro-
longation of the war in so far as they cause
a shortage Of the very things that
essential for the success Of our efforts in
France. We need only to refer to our last
years coal situation in order to under
stand what this means. Lord Kitchener
was correct when he said:
EITHER the civilian population must go
short of many things to which it is accus-
toned in times of peace or our armies
CT CHI Of
things, indispensable to them"
Plenty Left
We must not permit ourselves to be
frightened by the thought that strict econ
omy adopted by large and small will call
for an inevitable readjustment of certain in
dustries and trades, for although such
readjustment cannot be effected without
some discomfort to both capital and labor,
nevertheless, if two million men are with
drawn from employment for military SER
vice, at time when the government is
so urgent buyer of unparalleled guam
titles of goods, there must be no fear of
unemployment. Of course, there will be
temporary process of shifting of labor and
of transforming plants, but whatever tenn
porary discomfort may be connected with
these processes will be borne gladly l am
sure, a contribution on the part of the
SIay -dt-NOmeS toward the winning OF the
war The Liberty Loan flag that each COM
munity will set its pride on gaining is to
my mind, the "servce flag" of the civilian
population. .
To Saue Ourselves
Finally, looking at it from the individual
point of view, we ought to bear in mind
that the purchasing power of the dollar
may have gone down to stay, while taxes, I
am afraid, will remain on an increased
level for many years to come All of US
who derive income from securities or live
on fixed salaries will therefore have to
face the fact that in the future our income
will buy only one-half Of the things that
it could procure before the war, while, on
the other hand, our taxes have increased
In other words, to add to our capital by
saving in order to enhance our future in
come, is practice that we all ought to
indulge IN for our own protection
The last twenty five years have taught
the United States extravaganza. Indeed. we
have made scIcnce and virtue of extrava-
gance. The war is going to lead us back to
thrift, SO that while we serve the govern
ment by saving we save ourselves, at the
same time, by timely adjustment of our
ilves to conditions as they are likely to
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