The sun., 1919-02-13
CREDIT EXPANSION
NEARLY AT AN END
Treasury Committee Finds No
Need to Stimulate Gold Pro-
ducing Industry.
SEES NORMAL TIMES SOON
Contraction VIII Begin After
Rehabilitation and Read
justment Are on Way.
SEES NORMAL TIMES SOON
s,,ciol DespoteA TO Tan sux.

Special Despofch TO Tar suS.
WARRINGTON, Feb. 12.--There Is no
necessity for governmental or other
stimulation OF the gold mining industry
Of the nation according TO a report SUBJ
mitted to Secretary Glass to-day BY
tho committee OF experts appointed by
his predecessor 70 consider the situa-
ton. As result OF the wars end the
committee finds that no action is neces-
sary. IL believes that conditions Will
adjust themselves. that prices will come
down and the credit situation reach
normal.
All the members Of the committed,
Albert Strauss, Edwin +. Gay. Ray
mond T. Baker. Emmett d Boyle ard
Pope Yeatman, sign the report, which
Is IN part as follows:
eat that time (when the committee
was namely the war was at its height
and there was every prospect of a pro-
longed war Contrary to the belief APP
parently entertained In many quarters
the structure OF banking credit In any
country during wa time does not depend
very much II at al on the amount OF
gold that can be made available as
reserve for that structure. Undoubtedly
the rise in prices in this country since
1914 Is to n great extern due to the
and 1916. but II does not follow that
the export OF corresponding amount
OF gold at present would operate to
| bring down prices.
No Change TIL Conditions Are
Normal.
AS matter OF fact II Is the judg-
ment of this committee that Il would
M IN rot haH
| or approached normal peace conditions.
In time OF peace the goli reserve is
ndoub tedly an important factor in con-
trolling the credit structure, but In time
OF war that structure Is determined by
other causes. This distinction is some
times overlooked and much inaccurate
| thinking is due TO this oversight
''Under war conditions the imperative
necessity OF the Government for the
production Of war essentials determines
Government expenditures. and this ex-
renditure cannot be modified to meet
! the banking needs Of the country: on
the contrary the banking policies of the
country must conform to the fiscal
policy Of the Government. Under these
circumstances the only way In which
the expansion CT banking credits can be
checked Is by a reduction of civil de-
| rnands to correspond with the expand
| Ing needs for Government expenditure.
The credit saved through this reduc-
| ton Of civil demands becomes available
! to the Government through the purcha Sc
OF Government securities or through the
payment OF taxes. To the extent TO
which such saving and resulting invest
| ment does not take place Government
obligations must be taken by the banks
giving rise TO credits to the Government
| which create additional purchasing
| power for the Use Of the Government.
This additional purchasing power in
| turn completes with the demands of pri-
| vate individuals. driving up prices
against the Government and against tho
civil consumer and ultimately impairs
the individuals purchasing power to an
amount roughly equivalent to the i'm
pairncnt that might better have been
brought about through voluntary saving.
The credit structure thus erected depends
| inevitably upon the willingness and
ability Of the community to impose upon
| Itself voluntary restraint In expenditure
In other words, the structure will be
high " the community falls TO save.
THE results in saving achieved in the
United States were remarkable but no
programme of saving can be put into
effect instantly. and the expansion OF the
| credit structure that took place under
| could not have been controlled through
any reduction in the gold reserve.
This being so and n long war being
believed in prospect II was important
| TO maintain strong gold reserve in or
| der that there might be no impairment
of confidence in the converttbility Of our
| currency and In our ability ultimately
| to settle any International indetrt edness
In gold.
| changed radically the situation, and with
the change In the situation any need of
| particular effort to promote or stimulate
| our gold production which may have ex-
| listed has ceased.
Able 10 Meet Require ments.
''There In now no danger OF an inn
| poirment OF confidence. The Dimensions
! OF our financial problems are becoming
| clear. and We know that we can without
| permanent strain meet any financial re-
| quirement the Government will be will
| Ing 10 assume. Some further expansion
| OF credit may result from our expendi-
| lures for rehabilitation and readjust-
| ment. but we can look forward to n COM
| paratively early contraction OF our credit
! structure with the attending circum-
| stances OF free gold market and a
| gold reserve that once more shall per-
form It's normal function OF regulating
credit conditions. That movement we
believe, will be both preceded and ac-
| companied by lower commodity prices.
"Under these circumstances there IL. In
| our opinion, no need for artificial stimu-
iation OF gold production. Not only has
any need therefor passed but there have
come into operation causes that in due
time will restore all industry, including
the mining OF gold, TO normal basis,
| Gold mining then will become again nor
| mally profitable and respond autornat-
| ically to normal stimuli.
at Is therefore the judgment OF this
| committee that no steps should be taken
by the Government to stimulate or pro-
mote the production of gold
Tacoma strike Near Settlement.
TACOMA. Wash. Feb. 12.--In an off,
eial statement issued to-day. the Tacoma
strike committee OF the Metal Trades