New-York tribune., 1918-03-02

IS read in connection with statistics
ou5lished by "The Railway Age
Gazette" showing the effects Of
weather on transportation. The
storm reduction in the average
tonnage carried freight train
vas. on the Maryland division, 80
sier cent; on the Philadelphia divi-
Son, % per cent; on the Middle
division, IT per cent, and on the
Pittsburgh division, 3S per cent.
The inhationists argue that the
programme they are advocating
cannot be avoided and challenge
the opposition to produce a better
one, ignoring the fact that the only
sound method of financing the war
involves the shifting of purchasing
power from the civil population to
the government, inasmuch as the in
fation of credit and currency will
not in itself cause the production
of enough goods to supply normal
civilian wants and the war require
nlents as we'll The National City
Bank has pointed out this fact on
numerous occasions, but empha-
sizes it again in the monthly circu-
lar issued yesterday in terms we'll
worth repeating. 1t says:
1t has been asked what is the
alternative to continued expansion Of
credit. The answer is in resolute
substitution of war work for non
essential. industry, instead of at
tempting to do the war work in
addition to supplying all the private
demands which the public is accus-
toned to make This shift cannot
be accomplished without leadership
or without compulson, and without
it we will neither win the war nor
which the consequences will be dis
astrous.
By one route or another we must
come to this substitution at last. If
we supply he government with bank
credit as a means of making its pur-
chases it will indeed be able to make
them. but this new credit when put
into circulation and added to the
existing volume of purchasing facli-
ties will force up prices until a por
tion of the demand is eliminated and
a new equilibrium between demand
and supply is established. Thus the
same degree of curtailment in pri-
vate consumption will have been ar
rived at by blind, automatic, COM
petitive struggle as might have been
accomplished by intelligent self
restraint or authoritative manage
ment.
The bank again strikes at the in
fiationary section Of the war finance
corporation bill Placing control of
the investment market and provid-
ing facilities for financing war work
are features Of the bill which are
to be commended, but, the bank
says, it has
deprecated the proposal to admit in
restment securities sold for the pur-
pose of raising more or less perma-
nent capital as the basis of loans and
currency issues by the reserve banks.
We have done so because we are sure
there is no necessity for such action,
and have misgivings that the grant
Of power will create strong pressure
for its use. and tend to divert atten-
ton from the policy of general re-
straint upon private expenditures,
which we believe to be the true one
for this time.
So far as protection Of savings
banks is concerned, we have stated
that provision to pay their deposi-
tors, if there is any occasion for so
doing, is not open to the objection
raised against supplying money for
industry. for if depositors want their
money for the purpose of buying
government bonds all payments to
them will come into the Treasury and
can be returned to the reserve banks
az deposits. 1t is only as loans are
made in attempts 70 enlarge the vol
ume of industry, at time when by
reason OF natural limitations, it can
not be enlarged, that imitation occurs
Likewise, refunding operations make
no demands upon labor or new CAPT
tai. and therefore do not require re-
sort to the reserve banks.
With close control over the in
vestmcnt market 10 restrict the en-
ployment of capital to approved un-
dertakings, there is 10 reason to
doubt that there will be plenty Of
capital 20 meet the important de-
mands contemplated in the bill. At
any rate, IL is certain that no capt
raj can be created by borrowing of
the reserve banks at a time when
the working forces Of the country
are already employed to the limit. The
point has been reached then when
the relief must come by another
method the method referred 10 bv
member Of the Federal Reserve
Board IN recent address, in the fol-
lowing language:
"Jne auction which ne1,.ve ;,