New Ulm review. (New Ulm, Brown County, Minn.) 1892-1961, 1918-03-06
PURCHASING POWER OF MONEY
IN WAR TIME.

POINTING out that never before in
history has an understanding of the
simple principle of economics been so
sorely needed, committee of eminent
economists engaged in the study of the
purchasing power of money in war
time, issued to-day its first public state
ment.
| After exhaustive investigation this
committee has reached its conclusion
unanimously. It would impress upon
us tie imperative need of a reduction
of consumption and an increase of
production, of the repression of nor
essentials, and of promotion of or
ganization and redirection of industry.
''In meeting tie great national re-
adjustment to war conditions" the
committee says, Eve must not let our
'bvsine-s-as-usual' impulse prevent the
needed saving and shifting Of industry,
lie we pay a terrific penalty in higher
cost of living and national ineficiency."
The committee finds the public con-
fused and vacillating between two
economic philosophical the simple, di-
rect, old-fashioned, correct philosophy
of saving and working and the fall
lacious philosophy, best epitomized as
business as usual" Zone of our
greatest perils in the future lies in
further credit expansion" the commit
| tee says, "and this peril comes largely
from our lending by borrowing" The
committee points out the right way
; and the wrong way to lend money to
our country. ''The right way,'' it
says, "is the frank and honest way of
, saving up the money by spending less
or earning more; the wrong way is
/ the at first cheap and easy, although
ultimately costly and painful way, of
lending the Government what we bor-
row at the bank"
''By giving up nonessentials to buy
Government securities" the committee
further says, eve allow the Govern
ment to buy war essentials and at the
same time release productive energy
from the making of nonessentials for
us to the making of essentials for the
Government"
| But" it goes on to say, ''if We
won't make the needed sacrifice and
perhaps delude ourselves into believ-
ing that We do not have to do so or
even that we ought not to do so, that,
on principle, we favor business as
usual for ourselves while expecting
business unusual to be superadded by
the Government, we simply 60 through
the motions of giving our billions to
the Government without really giving
them up. Therefore the Government,
in order to buy away from us what
we will not otherwise surrender, bids
up Prices, and the rise in prices which
comes about through this sort Of lend
ing is cumulative
Gas the prices of war supplies rise
the money cost of war grows and the
Government has to borrow more. Big
ger loans by us to the Government re-
quire bigger loans to us from the
banks. This further expansion of bank
credit favors further rise in COM
m odity prices, starting tie whole process
over again in vicious circle
This committee. is made up of Prof.
Irving Fisher (chairman), of Yale Uni
versity; Prof. E. w. Kemmerer, of
Princeton University; Prof. B. M. An
derson, Jr., of Harvard University;
DR.. Royal Meeker, United States Com
missioner of Labor Statistics; Prof.
Wesley Clair Mitchell, of Columbia
University; and Prof. Warren M. Per
sons, of Colorado College. The com
mittee in collecting its facts has had
the cooperation of several branches of
the United States Governm emit, as we'll
as of some large commercial and financial
houses. Tie statement of the commit
tee follows: :
''The country has experienced an
acute coal situation, drastic coal
order, the breakdown of railway trans
portation, the taking over of the rail-
roads by the Government, mounting
living costs, and price fixing.
:"These events crowded upon us
while we were still congratulating our
selves on the success of the draft, the
passage Of fuel and food conservation
laws, and the unparalleled subscriptions
to Liberty bonds.
"Enrollments, laws, and subscriptions,
however, do not represent things ac-
complished; they are only plans laid
out. The test of the Nation comes
when we try to execute those plans.
The breakdowns we are experiencing
show the magnitude and difficulties of
our task. ..
eve are undergoing national re-
adjustment to war conditions = great