The Washington herald., 1920-05-30

The commodity liquidation which
appears to have gotten under way
in some quarters may tighten the
burden upon the banks, and it may
be that the worst of the credit
strain has now been seen. But pre-
diction proves difficult because of
the large number of factors that
enter. The autumn always brings
additional demands for credit to
move the crops. The banks will
doubtless continue for a time to be
called upon to finance our export
excess. Any indiscriminate calling of
loans or refusal to renew loans is
out of the question: "def1ation" at
the cost of essential production is
not desirable. That part of present
bank loans due to transportation
tie-ups cannot be reduced without
damage unless and until the rail-
road congestion is relieved. and
| though some relief may shortly ap-
pear, permanent betermen can
come only from more labor ana
more equipment-the last not a
very near probability. That part of
bank loans due to purchase of Lib
erty bonds cannot be reduced with
out injury to individuals until peo-
pie take more seriously the need of
saving and paying for the bonds
which they are still allowing the
banks to carry for them. That part
due to certificates of indebtedness
cannot be reduced until the gov
ernment's revenues exceed expendi-
lures enough to give a surplus to
redeem the certificates-again not
a very near probability. Finally,
that part of loans due to the financ-
ing of European export trade by
bank credits cannot be reduced
without bringing a halt to our ex-
cess exports. until people here real
ize' the necessity and the advantage
of funding these credits in long
term investment securities-or un-
til trade so reverses itself that our
imports begin to exceed our exports
again a very distant possibility.
1t would greatly relieve the pres
ent situation If the government
could arrange for the gradual re-
tirement of tho certificates of in
debtedness and of the currency
and credit at present outstanding
against them; and If this were er-
fected. not by levying still greater
taxes in order to pay off this foat-
ing debt. but by government econ
omy, that would leave n surplus
from present taxes to enable such
debt to be paid Off Such a step
would also greatly relieve the pres
ent credit strain.
Effects of Extravngance, o
Any failure or inability of the
government to bring about a con-
traction of expenditure does noE,
however. relieve the private citizen
of his responsibility for the correc-
tion Of present unbalanced coffoI-
tions. Collectively we have spent a
great deal of energy and print pa
per in denouncing the profiteering
of producers, but a large part OF
that profiteering would have been
impossible without the extrava-
gance Of consumers. Extravagance
encourages the increased produc-
ton of the less essential goods.
The increased production of the
less essential goods draws labor
and materials away from the pro-
duction of the more essential goods.
and hence creates a scarcity of
necessaries and an increase in their
price.
, The prosperity of the luxury,
trades was never greater than a.
the present day Based on tho
amount paid in on the so.sailed
luxury tax, the Collector or In
ternal Revenue for the New York
district estimates that 10000, 900