New-York tribune., 1918-01-17

Ii all the plans advanced lOr cur
failing operations Of non essential
industries were adopted. such indus
tries would be stifed beyond the
hope of recovery in this generation.
1t Is proposed to cut OFF their sup
plies of coal, to conscrlpt their
labor, and to bar them from the
capital markets so that they may not
float now security issues. And. if
these measures are not enough,
there is still another to fall back on,
namely to subject them to a process
Of slow starvation by withholding
their supplies of the thing they feed
upon-bank credits. This latter
suggestion is made in an article in
the current number of the official
organ Of the American Bankers AS
sociation, from which the following
is an excerpt:
AS war reduces, by destruction, our
total capital resources, it naturally
reduces our individual banking re-
sources. A large percentage Of the
resources Of bank is credit, based
on real capital goods. Hence, credit
must shrink in proportion to the
shrinkagc in real capital goods. There
foro it is time for banks, as credit
institutions, to begin to retrench.
Naturally, the lines Of credit to be
first affected will be those lines en-
ployed in the production Of non-es-
sentials. AS the war goes on, more
and more Of the real capital OF the
country remaining unconsumed in the
muzzle or wake Of the cannon will be
confined by sheer necessity to essen
tials, i. G., the production of goods
contributing to the efficient prosecu-
ton Of the war, and to the absolute
needs of both the combatant and the
non-combatant--c clothes, shelter and
food.
The present duty (both patriotic
and selhsh) Of the banker, then,
in recognition Of this inevitable shift
of every ounce Of capital energy from
the production of non-essentials to
the production of essentials, is to be-
gir the shrinking process in credit
to companies and individuals engaged
in the production Of non-essentials.
By so doing he will discourage the
employment of capital in non-essen-
tial lines and confine its use to cs-
sential lines.
Early recognition of the necessity
for such shift by bankers and their
immediate aim in that direction will
bring about gradual transition and
make it unnecessary for the govern
ment arbitrarily and abruptly to COM
pei it. Besides, to wait for the dras-
tic hand Of the government to fall
might put some bank credits on
financial quicksands.
Certainly this would be an effec-
tive way of restricting or destroying
unessential businesses, but whether
or not the banks, acting indepen-
dently, have any right whatever, as
a matter of patriotism, to take such
action surely is open to dispute
There is involved an intricate ques-
ton as to just what industries are
non-essential and in what degree
the restriction should be imposed
for it is obvious that not all Of the
non-essentials should be treated
alike. And an adequate definition
Of non-essentials is yet to be found
These are matters of Judgment, anC
not to be lightly decided by the in
dividual No one will dispute the
right of banker to restrict credits
as far as is necessary for the pro
lection of his institution, but the
banks should not, on their own in
itiative, undertake to smother ;
business merely because they hap
pen to regard it as non-essential
Judgment on that point must bt
left with the authorities at Wash
| ington.