New-York tribune., 1918-04-27
One Nation: Many Pockets
The Committee of the American Economic
Association Appointed to Report on the Pur-
chasing Pot0er of Money and Cost of the War
A Report by

der conditions like those present to-day,
to raise commodity prices.
But high taxes may also force men who
can do SO to borrow at the banks using
other property collateral. There is evil
dcnce that some large corporations al
planning to borrow to pay their excess
profit taxes.
Conscious Saving
From the standpoint of the purchasing
power of money goods the important
thing is not whether the tax policy the
loan policy is most used. The IMPORTANT
thing is that the cost of the aeor should be
paid as far as possible out of conscious
sarings and not out Of borrowings.
While a heavy NX policy helps toward this
end it could never of itself achieve it.
The public should understand that lend
ing by borrowing, though much better than
nothing, is still very unsatisfactory way
to help the government. By raising prices
such a procedure tends to shift the cost
of the war to the poor, who pay it in q
higher cost of living.
policy of exclusive taxation would cut
drastcally into the earnings of many bust
nesses and force them into bankruptcy
The creditors of these businesses would also
be in danger of insolvency. And, apart
from actual bankruptcy, doubt and timid-
ity on the part of business men, with re-
duced efficiency of industry, would re-
suit.
Under many economic conditions and
particularly in times of panic, stress or
rapid REIMBURSEMENT, expanding bank credit
Is often needed to tide over temporary diff
culties and to make transition easy At
the present time we are going through a
process of rapid readjustment, in which
many industries are being speeded at the
same time that others are being checked
and shut down, and this cannot be carried
through efficiently if sand is thrown into
the oil.
federation
Some expansion of bank credit, therefore,
ana even some rise in commodity prices,
must be tolerated.
wise discrimination on the part of
those who control the extensions of bank
credit is important. Loans to enable pco-
pie to continue luxurious living do un-
mltigated harm, but loans to the indus
trles expanding to meet war needs must be
made literally. Loans to non-essential
industries to enable them to expand, or
even to continue at their present volume
OF production, are clearly pernicious; but
limited and carefully guarded loans to bust
ness men in non-esscntial industries. 10
funds needed by them to maintain their
solvency and give them time to lquidate
slow assets, are justifiabe.
The purpose underlying the projected
finance corporation is, apparently, to
make just this kind of discrimination in
the extension of bank credit in financing
business-to lend literally where cxpan-
sion is required, to lend where bankruptcy
is menaced, but to prevent the financing of
business expansion in non-essential lines.
We feel that the danger as so great.
hoaoerer, that expansion mau be carried
TOO far, rather than tar0tion sciU be
made too drastic, that ace feel justified
IA placing heavv emphasis on the need
Of limiting eapamsion of bank credit by
ece'y practicable means.