The sun., 1919-01-20

Inc best known economists and bank
ing experts in Great Britain and the
United states are urging introduction
Of public and private economies as the
best means of restoring order out OF
the financial chaos brought on by the
war. In the report lately presented TO
the British Parliament, Lord Cunliffe S
committee. touching after war problems
and steps required TO restore normal
conditions, emphasis is laid upon neces-
sty of making good shortage OF capital
through genuine savings Touching de-
mand for public Improvements calling
for large OUTLAWS, the committee says
I'VE are aware that Immediately af-
ter the war there will he strong pres
sure for capital expenditure by the
State in many forms for reconstruction
purposes. but It is essential to til,
restoration of an effective gold standard
that money for such expenditure should
not be provided by creation of new
credit, and that. in so far as such ex-
penditure is undertaken II should be
undertaken with great caution.
The necessity OF providing for our
indispensable supplies Of food and raw
materials from abroad and for arrears
OF repairs to manufacturing plants and
the transport system at home will limit
savings available for new capital ex.
p''l'lllIIt LOT II period. ms
caution is particularly applicable TO far
reaching programmes of housing anc
other development schemes
THE shortage of real capital must bt
made good by genuine savings, 1t can.
not be met by creation OF fresh pur.
chasing power In form Of bank advance,
70 the Government or to manufacturer.
under Government guarantee or other.
wise, and any resort to such expedient,
can only nggravate the evil and retard
possibly for generations. recovery Of the
country from losses sustained during IN,
war"
Just about tho time that the report
was made public in the United States
the Federal Reserve Board warned tn,
American people against unnecessary
borrowings, saying:
The rehabilitation OF European in
dustries 10 be effected az a time wher
urgent necessity for renewed sales o.
securities still exists. suggests the prob
able effect OF a double burden upon III,
banking resources Of the community
Additional bond sales, unless precede.
by an elimination of inflated conditions
by genuine and rigid restriction o.
credit. must either prevent the banking
mechanism OF the country from function
ing as II otherwise would in facilitating
reconstruction Of European industry ant
at the same time assisting in resumptior
of domestic development so long arreetec
as a result Of the war. or must be uset
as a basis for furnishing needed fund,
through Government advances to allied
nations,
Not all the multifarious demands
which are being made upon the resources
of the country can be compiled with, bu
Il oh nj h. IL 49,
greater and those of less degree o
urgency. Such adoption OF resources I,
use TO he made Of them Is unquestion
| ably an essential element In the malnte
nance OF banking soundness ad liquid
| ity"
Any one familiar with the world Wild
pressure for capital to make good vast
of war will realize the need for the ad
monitor. They are especially in poin
Mt time when efforts are being made I,
have states and municipalities launcl
new public improvement schemes. In
| volving immense outlays.
There is n vast amount OF necessa Y,
! financing which must be provided 10
and although this country's gold reserv
! IL much the largest in the world 1
would not he equal TO strain OF sup
porting a reckless loan expansion. TIL
season when new building projects viii
have to he financed and when much de
velopment work In various industrie.
long postponed, will have TO be re
sumed is near Such operations call 70
| skilful financing, since hazards OF in
vestment markets during reconstruction
are IN some respects quite as difficult [
provide for as were hazards Of the wa
markets.
| Problem of tho Railroads.
The Government will offer its forth
coming loan at an attractive investmen
basis but IL IL foolish to suppose tina
the inducement will take the form Of
$3.50 nOn tax eyemntIon offer Tho ey