Grand Forks herald. [volume] (Grand Forks, N.D.) 1916-1955, 1919-06-16
DEBIT AND CREDIT

During the past five years the nations engaged in
the war have added one hundred billion dollars to their
Indebtedness. The amount is not accurately stated, but
the figure will serve. Not only have the belligerent pow
crs increased their indebtedness, but the menace Of war
and the influence of war conditions have operated to in
crease the Indebtedness of all the neutrals sufficiently
advanced to engage in the game of debit and credit. Ig-
noring. therefore, those peoples who are outside the field
of banking and exchange, the entire world has been pill
ing up Indebtedness during these fateful five years, and
the debt of every nation has reached a truly appalling
sum. That makes a very pretty subject for the alarmist,
and a beautifully horrifying picture can be painted by
filling in with suitable strong colors the outlines Of the
sketch suggested.
But let us forget for the moment that there has
been a war, and let us consider merely the figures in the
ledger. We look at the debit side of the account. and
find that the world has increased its Indebtedness be-
You'd the normal in the amount of some hundred billions.
Therefore we say that for some reason or other the world
has been wasting its money and is at the very door of
insolvency. if it has not already entered. :
But let us examine the other side Of the account,
the credit side. We find there that the world has in
creased its credits by one hundred billions, because every
dollar that is owed is owed to somebody. The vast debt
that has been piled up is represented by bonds-prom-
ised to pay; and those bonds are all owned by individuals
and institutions in the-great group OF nations which have
contracted the debts. We find, then, from an inspection
richer instead Of posrer, and we congratulate the world
on its thrift and prosperity. Which view is right
To rid ourselves Of the thought Of billions, which
we cannot comprehend, let US consider the principle in
a simpler form. Smith and Jones own two great ranches
adjoining each other, and entirely out of touch with the
rest Of the world. Neither Of them owes anything. A
financial statement would show the district inhabited
by these ranchers entirely out Of debt, q state Of affairs
usually regarded as very satisfying. But smith finds.
that within the year his SHOCKS and herds have increased:
at far more than the usual rate, and beyond his feeding
capacity. therefore he would like to sell some stock.
Jones. on the other hand. has been unusually fortunare>in
the matter of feed, and can handle more animals than
he has. A deal is made. therefore Jones buys a guam
.tity OF stock from Smith. and. having no money present
" available, sivss his note to Smith tor the purchase
price, $4,000. 49, 4
zhe financiaI Investigator comes along again, and
this time he finds that instsAd 81 the freedom from debt
whtch he found before there is now In the district an M
.of $4,000 represented by notes -Thearefors.i
AZ: assunaes. the district has- been rsnninS bshinA u the
rate nc s11A 200 = ysar. Or II Ne 81 ii ssa1sheof cfsdits.
hs mas ehasSssssssftd1s - ehsid q ~ dssts4et tor tleesl
~ norss than + ysar -. which he accepts = asmarksd
syss9ssHs - ssss Hyssssy asSM8 ssg