New-York tribune., 1918-08-21

mas taken a commemorate pOSlClOn
on the question of curtailing or
eliminating non-essential credits,
and it is to be hoped that business
men will heed it's advice and lean on
the banks as little as possible, ex-
cept in those cases where loans are
required for purposes connected
with war activities and the supply
ing of the actual needs of the peo-
pie. Restricting the use Of credit
will not only add strength to the
banking position, but will tend to
prevent the dangerous imitation with
which we are threatened. Unfortu-
nately, there is not much chance
that business can be induced to con-
serve credit in substantial way
merely by exhorting them to do so.
Only rigid scrutiny of all loans by
the banks will accomplish the de-
sired end. While some of the banks
are now examining all applications
to determine whether or not loans
are for essential purposes and par
ing down those which fail to stand
the test they are lacking an official
classification of essential and nom
essential industries, unable to with
stand pressure in all cases, and
make many loans that would not be
passed were such a classification
available. It might be politically
unpleasant to make such a list, but
it is needed, and the sooner the job
is undertaken the better it will be
for all concerned.
1t has been suggested that the
most effective way Of curtailing the
use of credit would be to arbitrarily
raise the rates of interest. That
might, indeed, have some effect, but
hardly enough to count. Moreover,
it would hurt some of the essential
industries for which prices have
been fixed a great deal more than
the non-essentials. Many of the lat
ter could pay almost any rate that
the banks might ask, for the cost of
money is now a relatively small
item in the cost of doing business
proportionately smaller than it was
a year or two ago, when rates were
lower. At any rate, it is the general
opinion of the governors of the Fed
eral Reserve banks and of the Fed
eral Reserve Board that mo marked
advance in rediscount rates was
called for at this time" and that
conservation of credit would, for
the present at least, be more effec-
lively and thoroughly secured by
the adoption of general plan of CO.
Operation rather than by the appli-
cation of uniform advances in rates
of interest" That is the way the
latest Reserve Bulletin puts it.
Between June, 1914, and June,
1918, the number of employees in
New York State factories increased
little more than 20 per cent. In
the same period the total payroll of
these factories exactly doubled. But
the worker, on the whole, gained
little by this great rise in wages,
for, while the average weekly earn
ings advanced 81 per cent, the cost
of food at retail climbed 81 per cent.
Possibly the retail prices of other
products entering into the family
budget have not increased as much.
but it is practically certain that the
margin Of income over expenses is
no greater in terms Of purchasing
power than it was before the war.
and the probabilities are that 1t is
considerably less.
One Of the disturbing features of
the State Industrial Commission's
June report of labor market condi-
tions is that, while there was an in
crease in manufacturing activity, as
measured by the number of workers
on the payrolls of 1,648 factories
employing approximately 100000
hands, the expansion was due, to
some extent, to greater activity in
non-essential industries. That would
indicate that the nation is not strip
ping for war as ranidlv nc sona