New-York tribune., 1921-12-11

however necessary it may be to the
re-establishment of the new equili-
brium. The government finds itself
embarrassed by the drying UP of the
sources of its revenue. The prudent
and the patriotic, who have undergone
sacrifices in order to invest in gov
ernment paper, suffer for their patriot
ism. The splendors of the former
prospects are now seen to have been
only mirage. The golden age of in
tation turns out to have been after all
nothing but a giltpaper age.
Where the abuses have not been so
excessive, the consequences are not so
painful. But the tendency is every
where the same, and the evils are al
ways present in some degree
Escape From Initiation
The fourth conclusion from our sur
vey refers to the disappearance Of or
escape from, imitation. This. as we
nave seen, can be accomplished only in
two ways: Through reduction of the
oebt or through the contraction of the
paper issues which we have become
accustomed to call defation. The only
possible methods to reduce a debt are
to pay it or to repudiate it. Not a few
countries, as we know, have resorted to
ing part of the existing paper cur
rency at a discount
AT the present time Only lew of the
recent belligerents are dealing seri-
ousay with their public debt. Italy and
Germany, as we'll as Austria and
Czecho-S -Slovakia, have adopted the pro
ject of a capital levy, designed to wipe
out a substantial part of the public
debt by the collection of large rev
enue from property. Even here, how
ever, the efficacy of the plan has been
much impaired by the provisions for
spreading the burden over long term
levy into what is virtually an addi-
Ional income tax. Unless all signs
fail, there is little prospect of these
gigantic debts being paid. AS with the
nineteenth century war debts they are
likely to remain a perpetual burden on
the community, the weight Of which
will be lightened only by the gradual
increase OF wealth and prosperity
Unless, however, the greatest care is
taken, there is serious danger lest the
actually existing debts be further in
probable result of total or partial
reputation.
The second method that has been en-
ployed is to overcome the evils of in
fiation by contraction deflation or con-
version. The experiments that have
been made with contraction in the nine
teenth century, however, are not such
as to inspire US with great confidence.
For, as we have seen, contraction or de-
f1ation, carried beyond a certain rea-
sonable point, almost always spells
commercial embarrassment and busi-
ness disaster. The early effort at con-
traction in the United States after the
Civil War was, as consequence, soon
checked. The most that can be hoped
for at present is cessation of further
imitation and q prudent conduct during
the years of gradual recuperation until
measure of re-established confidence
and prosperity may render possible
conversion OF the existing paper money
and reintroduction of specie paw
ments. This conversion, as we have
seen, sometimes take place at par, after
period of probation, as in England in
1921, in the United States in 1879, or
in Japan in 1886. In other countries.
as we have learned, the conversion has
taken place at a discount which, es we
have just pointed out involves vir-
tual reputation. Again, conversion
has sometimes been made possible
through the adoption of an entirely
new unit, as in Austria in 1892 Final
~ conversion has occasionally been
aided by an institution for special con-
version or by redemption fund, as in
the Argentine and in Brazil.