The Washington herald., 1919-11-23


position has not been faced. and
we have gone on staving OF i'm
pending trouble by any device
which give US a temporary respite.
The time has come for courage and
real leadership. IL only the gov
ernment will give US a clear call.
/ am convinced that the vast major
ity OF all. classes will respond as
loyalty and unselfishly as they did
to that other call which came nve
years ago"
Sir Alfred Booths views are more
pessimistic than those of some au-
thorities here. but none quarrel
with his facts. To a great extent.
the present deplorable financial
muddle L. held to be unavoidable.
Money had TO be found to beat Ger
many. the allies had to be financed
during the early part of the war.
and Britain is not as rich as the
United States. But there is now a
tendency among experts to savage
ly criticise the Treasury for issuing
so much paper money.
High Prices Explained
The facts about this can be put
in two paragraphs that explain the
high prices now prevailing. Before
the war. there was no paper money
under tho five pound or S25 note.
Gold and silver circulated freely.
All Bank Of England notes. and
none others were circulated. were re-
deemable in gold.
When war broke out, 500. .o0u.-
900 in s. and $3.50 currency certifi-
Gates Were promptly issued. and
gold was called in. and locked up
by the Bank of England. a yea.
after the war began. the issue OF
paper money had been held down
to less than $3.50. 100000 but after
that il began TO go up with starts
ling speed. AT the end of 1916.
S50,00O.OOO paper was outstanding.
a year later more than a billion.
and on June 25 last the stupendous
sum OF 1.700,O00.o0o.
During the same period, the note
issue OF tn" Bank Of England. bills
OF . and upwards, trebled. And
under the whole pyramid of paper
rests a gold and bullion reserve OF
only $4,000. 900. Something like
fifteen dollars in paper is outstand-
~ toe every gold dollar in the
vaults. Hence Sir Alfred Booths
bitter comment that British money
IL now on a par in everything eN-
certing degree with that of the
BoIsheviki.
What Is the Remedy.
What is the remedy? Here politi-
cal passions become fiery. II is
easy to say that the currencs
should be debated. 1t is the method
of defIation that cannot be decided.
One school wishes a levy on capital
or all war profits taken away so
That every mans fortune will not
exceed what he possessed at the
be eginning of the war. Thus. il l.
argued. the war debt can be paid
at a blow. and with that out OF
the way. deflati0n will be possible.
1t is argued that to call in billions
in paper now, even were il other
wise possible. and TO go back on
the gold standard. would make
money twice or three times as
valuable. and as hard to get. as IL
is today. But since to resume the
gold standard would not lessen the
necessity to pay three to four bill
lions year interest on war loans,
the burden on the tax payer would
he increased by deflation. There
fore. liberals and radicals and labor
members say. pay Off your war
debt il necessary by confscation be-
fore you debate your currency.
Rmt rho pr"r"rt|cd interests argue
otherwise. Initiation they blame up
on high wages. The vast dema nds
of the workers" il is said. have
been provided for by a colossal in
crease in the mount Of currency.
which, Of course. depreciates the
value of money and leads 10 a cor
responding increase in the prices OF
goods. The remedy is simple. Cut
wages. and prices will come down
of themselves"
Old Lion VIII Come Through.
Whatever the remedy may be. II
is not easy to follow the obvious
course that suggests itself to any
government when it finds it is not
making both ends meet. Increase
taxes" say Sidney webb and mis-
followers in financial thought. But
already in income tax the ordinary
man in the street, who makes $500
to $4,000 year. has to pay 500
TO $3.50. Whether this load can he
increased without grave results up
on the staggering professional men
and workers with small incomes,
is gravely doubted.
l have tried without quoting sta
tistics or going into long and COM
pIicated explanations to show the
American reader what is back of
the cries about bankruptcy and ruin
that arise from a prosperous land
wnere everybody H. working and
production is booming. That the
situation is most ditFcult and awk-
ward is evident from what has been
said. But the American must re-
member the British bait of pessim-
ism and self-depr eciation. Tho Old
lion will come through as always.