New-York tribune., 1918-01-30

He was quite right; and the least
agreeable aspect, as the financial
community sees it, is the haphazard
manner in which the great task Of
financing the war is being handled.
The bill to create WAR Finance
Corporation" affords the latest il
lustraton of the confusion and obvi-
Gus lack of cooperation between
the authorities having to do with
national finance. Less than a week
ago the Federal Reserve Board, fol-
lowing the plan outlined in the an
nual report of the Secretary of the
Treasury, and based, apparently
upon the recommendations Of the
leading financial authorities Of the
United States, announced the for
nation Of a Capital Issues Commit
tee, supplemented by an Advisory
Board, to pass on all new capital
applications, the object being to re-
strict the issuance of securities for
purposes not essential to the war.
The regulation proposed would have
been voluntary, rather than compul-
sorry, but with the full cooperation
of the banking and investment
security interests there is every
reason to believe that it would have
been effective. Now, before the Ad
visory Board has had chance to or
ganize or consider plans bill is
hastily made public by the Secretary
of the Treasury under which all
security issues Of more than $780,,
900 would have to be approved by
those directing the activities of the
proposed "War Finance Corpora
tion," namely, by board of di
rectors, consisting Of Mr.. McAdoo
and "four persons to be appointed
by that official with the approval of
the President" Disregarding for a
moment the merit or lack Of merit
of this plan, it is obvious that if it
should be put into effect there will
be no need for the organization
formed by the Federal Reserve
Board last week. Therefore, it
should never have been created. 1t
will have served no purpose except
to waste the time of some of the
leading financial experts of the
country.
1t is doubtful if any organization
in the country has as much power
as it is proposed to confer upon Mr..
McAdoo and any four men he may,
with the Presidents approval, select
as associates in carrying out the
plan. They will, if the bill should
be enacted into law, be the financial
dictators Of the country, holding
power of life and death over exist
ing enterprises and the power to
deny existence to any new project.
The proposal is fraught with dam
ger. The question of which indus
tries are essential and which are not
is one of the most intricate ever
raised, and no one has succeeded in
arriving at satisfactory determi-
nation of it. Probably no one ever
will, for the ramifcations of indus
try are so innumerable and inter
woven as to be inextricable. Yet if
the bill should be enacted the Sec
rctary, in such periods of leisure as
he may have when not running Lib
erty Loan campaigns, the Treasury
Department and the railroads, would
have to decide the question with the
assistance of four unnamed men. He
could, if he choose, make such deci-
sions arbitrarily, and the decisions
would stand for better or worse. As
far as it depends on new capital the
fate of all American industries
would be in the hands of a group of
five men. four of them to be selected
by one who already has to carry out
a task greater than that imposed on
any one in the United States except
the President.
There are other serious objections
to the plan. Under one section of it,
the dispatches state, the corporation
would have the power to issue notes
or obligations not in excess of $4,-
100000, 900, the notes to be eligible
for rediscount at the Federal Re
serve banks, and against which Fed
eral Reserve notes would be issued
That is the most amazing proposal
for naked initiation ever put out in
Washington. We are, apparently,
committed to war finance by infla-
ton, but no one has hitherto gone
so far as to fatty suggest that we
pump $4,O00,0 100000 of bank notes
into the currency. The effect on
prices of an increase of four billions
IN circulation, even though extended
over considerable period, would be
startling. They would rise, possibly
100 nor cont IN, ovo,, ,>>o~o - -. -