New-York tribune., 1918-02-24

chat month they produced freight
transportation equivalent to carry
;rc S6.oSS,Sl5,9S2 tons one mile, an
;ncrease of l,l54,540,294 ton miles
.ompared with the corresponding
month a year before.
Passage of the Administration
.o;,road bill, in substantially the
came form as it was originally
drawn. was followed by a moderate
rise in railroad stocks yesterday.
There was nothing sensational about
.be movement, which amounted to
.uehtly more than point on the
average. The average price of tif-
loon representative railroad stocks
now stands at about the highest
level attained since the elimination
last December of a decline that last
I'd nearly two years. The vast
change in investment conditions is
apparent from the fact that, with
earnings guaranteed on basis far
above normal, the averages show
that railroad stocks are still more
than so points below the pre-war
level, when industrial depression
prevailed. That securities Of fixed
or limited return have suffered rela-
lively more than those on which no
limit has been placed is undoubtedly
result of initiation, which has so
decreased the purchasing power of
the dollar that an adjustment of
securities to a higher income basis
vas inevitable. The liquidation of
such securities has been SO drastic,
however, that it is doubtful if fur
ther imitation will have such marked
effect on investment values.
In discussing the war finance cor
poration bill before the Boston
Chamber of Commerce, Thomas w.
Lamont said:
This question Of expansion of bank
loans brings to my mind the dis
cussions recently regarding the War
Finance Corporation. A great deal
of criticism has been levelled at Sec
retary McAdoo on the plea that this
bill would cause an era of imitation;
and there has been loose talk about
an increase of four billions in form of
fiat money this bill would authorize.
1t seems to me the bill would prob
ably reduce imitation, rather than
create it. Here in New England
many industries working day and
night on work connected with the
governments programme have re-
CURED additional money for plant
account. With an unfavorable invest
ment market they have probably
been forced to rely largely on their
banks for short term loans, process
which has increased both loans and
deposits without change in the
metallic reserve.
II through creation Of an obliga-
ton of a quasi si-government corpora
tion Gas provided in Finance Corpora
ton measure), banks can be relieved
Of portion Of such advances, the re-
suit will be contraction of bank loans
and no increase iii deposits. 1t is
true the act would authorize Federal
Reserve banks to deal with obliga-
uons OF War Finance Corporation as
with government bonds, involving
what would in a sense be return to
theory Of bond secured currency. 1t
seems to me, however, that powers
given Federal Reserve Board to con-
trol issuance cf such circulating
notes are sufficient to prevent under
issues along this line, and relief af-
iorded. both to necessary industrial
lie and savings bank situation. is so
OBVIOUS that | have felt ADVANTAGES
OF the measure greatly outweigh
disadvantages.
This IS repeated because it is
typical of the arguments advanced
IN support Of proposal which
might more properly have been
called the "War Financial Initiation"
Dill. 10 say that the bill would re-
duce Initiation is equivalent to saving
that there is no intention of carry
ing through the operations which
are permitted under it. Moreover
up to the point of issuing currency.
the banking position might easily be
made less liquid rather than the re-
verse. In the end it probably would
be found that the bulk of the Sc
curities issued by the corporation
had found Judgement in the banks, as
is the case with other short term
government obligations. The posi-.
bilities of preposterous and naked
imitation under this measure are toe
obvious to be ignored; so all those
who support it perforce attempt te
minimize the infationary feature
Inc reasons for doing this are not
hard to find. They are clearly set
forth by l.. T. McFadden, a member
OF the House Committee on Banking
and Currency, in a noteworthy con-
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