New-York tribune., 1918-10-22
WALL STREET OFFICE:
Mills Building, is Broad St.

issue of Liberty loans which may be
Of wide influence in the days that
follow peace. That is the swift crea-
ton of colossal amount of new
and prime bankable securities. The
further point is that these new secu-
rites will be in the hands of people
who have not hitherto been large
savers. That is to say, they do not
belong to the typically thrifty class,
which statistically is extremely
small Most people. if they have
any money, will devise some means
of getting rid of it.
Even if the war should end soon,
and there now seems little prospect
that it will, the total Of the Liberty
leans will certainly exceed twenty
billions and possibly twenty-five
Consider what this means. The total
of net banking resources does not,
even in these expanded days, much
exceed eighteen or twenty billions.
Yet under the Federal Reserve act.
as amended, it would be possible,
even with the 'present reserves Of
gold, to considerably more than
double present loans. Not many.
perhaps, have considered it in this
light, but the Liberty loans repre-
sent the solidest sort of base for
a very great expansion.
1t is quite possible that with the
cessation of war activities there
will be a considerable reduction in
volume in many lines of business.
Some of the more conservative and
pessimistic believe that this reduc-
ton will be drastic. They do not
believe that it can be balanced by
the large demands for American
goods which will come from South
America and other lands which
have enjoyed great prosperity in
the war, to say nothing Of a great
demand for copper, cotton and
many other commodities by the
warning countries themselves. But
if prices should fall rapidly and
business recede in proportion, the
incidence would be upon a country
loaded, so to speak, to the gunwales
with highly liquid collateral. Gov
ernment bonds are excellent
paper" If, on the other hand,
business should continue good, it is
we'll to recall that many lines Of
trade, and speculation, have during
the war been running perforce at a
very low level. Farm lands and real
estate generally, for example, are
selling as rule on a pre-war basis.
With the natural resumption Of
building activity there might read
lily come brisk movement in the
realty field. Here again the funds
required might readily be supplied
by bankable Liberty bonds. And
the same in other channels of busi-
ness. To very large extent the
Liberty loans represent a real ac-
emulation of capital.
There is a very general expecta-
ton that if prices should fall there
would be a corresponding reduction
i'll bank credits. But it is evident
that to some extent at least this
would not needfully be true. If,
then, anything like the present vol
ume Of bank loans should be main
tanned, it is evident that this would
imply buying power not greatly in
ferior to that of the present time.
The return of several millions of
war workers to their normal occu-
pations hangs like nightmare over
many minds. But it is obvious that
the demand for the pre-war product
of these same workers might be Just
as great or greater than it was
three or four years ago. So the
fall in prices, and the corresponding
reduction in credits which this
would involve, may be less than
many imagine. At least, so the
more cheerful argue. The point
made here is simply that the way
will have created for us volume of
new securities that may easily
equal half of the total volume be-
fore the war began. They will GER
tainly far exceed the total Of all
railroad securities, the slow accu-
mutation of eighty years. And these
will be in the hands of people new
to the security market, who make
use of their nossessions in GREAT