New-York tribune., 1918-10-28

is not true If we cannot. Our present
war expenses, equally with the later in
terest charges, must, perforce, be de-
rived from our available margin of cur
rent income over current civil consump-
ton.
But ii we can bear this degree OF ta>
burden after the war on our war debt.
Why talk Of borrowing during the war
until, having taxed up to our current
ability to bear, We meet a further need
of funds? Why, when all is said, bor-
row at all? Professor Phelan is argu-
ing that we may wisely burden the fut-
ure-not only that we can, but that we
ought. He is pointing out the theoreti-
cal limit on our interest carrying
power, and therefore, as he says, on our
borrowing power. But there is still
difference. Is he pointing out the limit
up to which our security would enable
US to ind lenders to finance us, or the
limit on the interest that later we
should find ourselves able to pay?
This difference is all important. 1t
does not follow that up to the limit that
We can furnish adequate security TO
thc tenders, or up TO the limit that we
en- meet our interest obligations. IN TO
TINS limit ala we ought to borrow or
can borrow. In truth, il is ad1. .itted
that we ought not to place all of the
burden OF the war on the future. But
1T is asserted that we could place all of
1t there and ought to place some of Il
there, and that $400, 900, 900, 900 of bonds
bearing $20,O00,000,00O of annual inter
est do not exceed the limit of what we
may, If we will, do in the way of bor
rowing. Our finances per Sc will hold
out for a long time" - '0'N
America Has No
Place to Borrow
The actual truth is tnat if America
cannot borrow four hundred billions. or
borrow much of anything, abroad for
It's present war it will have to do what
ever borrowing it does at home. pre-
c.isel y where, if it collected the funds
by taxes, 1T would have to get the
taxes. We arc lending abroad, not
borrowing abroad. We are financing
others wars in addition to our own.
But we can still offer, we will agree
security for 400 billions of bonds if
we can anywhere find the investors to
buy them. We can pay-we will say
II we must, 20 billions of interest
but can We borrow 400 billions at home
-,haVlng no other place 10 borrow
them! Perhaps; only in how MANY
years? Just 20 years, inasmuch a. as
~ billion Is by assumption our utmost t
possible limit of net current revenues.
but equally we'll can we tax for 20
pllilon5 year since by The same a.
SUMPTION this is our available margin
CT gross revenue above our oneratin O.
expenses, cur current and pressing ne
cessities of living. Whoever can cash
oohds can pay taxes. Neither thing
can any one do excepting out of his
expenses: Either thing can be done
II there is this surplus, the one equally
WIN the other. 1t is not the sort Of
Silp OF paper that one receives when
ne paws his money that decides how,
Huch he can pay-much if his recent
bears interest. little if it is a mere
discharge but his margin Of dispos
able income
But if the receipt bears interest. will
no. seane bank buy il or discount
notes secured by it, giving deposit
credit to its amount? Possibly so:
even probably. But. by the still exist
ing assumption, there is national
margin Of only 20 billions. That il
all there is-the gross national earn
lNgs OF operation. less the necessary
current operating charges. The bank
ing system can do nothing to cancel or
modify this Fundamental fact. The
oank can merely issue more currency,
increase the media of exchange, nut
ting the borrower in possession of it
or itself buying bonds with il. T.
cannot provide eXchangeablc products
things to be eaten. to be worn, to
nc burned. The 20 billions of available
margin Is still only 20 billions-in
,crms Of things
The truth is that our attempt to
push our war outlay beyond the avail
able national margin Of paving power
meets the difficulty that there is no
0ther America for us to borrow from
We have to borrow from ourselves
Thus we have one and the same margin
for either borrowing or taxes or For
both together. All the talk of the abil-
ity to borrow 100000, 900, ,O00-unless