New-York tribune., 1918-03-19
Thauing the Assets
To the Editor of The Tribune.

T KNOW that we look at the War Finance
Corporation from different points OF
view; yet l am tempted to write you
again because of the statement in your ed!-
torial of March II to the effect that favor
the legislation because there is nothing bet
ter to offer in its stead, but that l regard
the measure "regrettable."
That is phrase that l never used; what
said in my letter to you of February 18
vas that l should not favor the proposed
plan under normal circumstances. AS you
yourself say in your excellent leading arti-
Gle Of March 13, GAIL warning countries have
scrapped their old ways and old methods,
under the driving exigencies of war. This
is not time for theories or precedents."
Under these abnormal circumstances in
which the country finds itself there are
two vital objects that must be accomplished.
Both OF them, it seems to me, will be at
tanned through the workings of the War
Finance Corporation One of these is to
restrict borrowings for purposes which are
not compatible with the war; and the other
is to employ, in industries whose opera
tlons arc necessary for the war, such funds
as may be available for investment
The method you suggest of compelling
the government to guarantee the renewal of
all maturing securities would be to nullify
the judgment Of banks and bankers through
out the country on the financial soundness
OF given renewal. How could such an out
come be otherwise than most undesr
How could it fail to tie up the government
IN great mass of operations with which
1t should properly have nothing to do? The
war Flnencc Corporation provides that cx-
cept IN exceptional instances (such as cases
where the needs OF a deserving borrower
have not, in the judgment of the War
Finance (OrDOrafiop
atom the War Finance Corporation will
not make any leans direct to corporations
Eather it is to act as measure of relief
Tor lending institutions whose assets have,
through too large investment in non-redis-
courtable paper and securities, become
frozen up
Why Fear?
AS to your further apprehension there
seems to me to be no more reason for fear
ing the issuance of $4,OO0,OOO 900 of 81 O
U.s., which you seem to think will happen
than to fear the issuance of $500, 100000
Of circulating notes on the security of the
United States government Liberty Loan
bonds already outstanding. The Federal
Reserve banks have to-day the same right
to issue circulating notes in satisfaction of
deposits created by rediscounts on Liberty
bonds that they would have on similar re-
discounts secured by War Finance Corpora
ton bonds. Yet, according to the reported
testimony before the Senate committee
within the last two weeks, it was stated by
Mr. Warburg. believe, that the amount Of
rediscounts in the Federal Reserve banks
on Liberty bonds only about $500, ,OO0,-
600, approximately 5 per cent Of the total
OF the Liberty bonds outstanding.
have the same strong feeling that you
have against unnecessary expansion, and
to guard against this, SO far AS it may be
possible, think it wise to throw all the
light VIC can upon the probable effects of
the proposed legislation. That is my reason
for continuing this discussion. In Justice
to the Secretary of the Treasury and those
of his staff who have worked out the main
features of the War Finance Corporation
bill, it seems hardly fair to critcise this
bill without at the same time pointing out
the other side cf the argument and setting
forth information which is easily available
from the important testimony given in the
committee hearings. r. w. LAMONT.
New York, March Is, 1918