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Finance - Economies WALL STREET OFFICE: . Telephone Mills Building, 15 Wall St. Hanover 6514 Statistics just published by the; Federal Department of Labor Sta-j tistics show in a striking way the J results of the Russian policy of! financing the war by unlimited in? flation. The unskilled laborer who got a wage of from 62 to 77 cents a day in July, 1914, received $4.12 in August, 1917. Skilled machinists who earned from 90 cents to $2 a day before the war were worth nearly $5 after three years of pre ? -posterous currency and credit infla? tion. The average advance in the wages of4 workers in eight trades approximated 400 per cent. But that is only part of the story, for commodity prices climbed to even more fantastic levels as Russian currency cheapened and confidence in it evaporated. Meat rose from 400 to nearly 800 per cent in price; clothing, 900 per cent; shoes, 1,700 per cent, and so on with everything from pleasure to housing. It was an impossible situation and a col? lapse was sooner or later inevitable, even if there had been no other con? tributing factors. It is from this view that we recommend the study of the figures, for they carry a les? son for this country the importance of which cannot be overestimated? a lesson that Is clearly presented in an article in another column by one of America's foremost economists. "Russia should afford an example ?extreme, no doubt, but most illu? minating?" says Professor Daven? port, "of the dangers of financing war by methods of currency infla? tion. There was?there still is?no difficulty with Russia's resources, her margin of available surplus product to maintain war?though she probably attempted to make her . armies overlarge for her powers of maintenance. But once her money was discredited, her me? dium of exchanges and of payment, all her resources became unavail ?ble?and they remain so. For her to have borrowed through bonds marketed by bank inflations, had this been possible in Russia, would have somewhat extended her period of endurance. But the limits are none the less inexorable. No finan? cial policy can meet the endurance test that commits the blunder of piling up indebtedness or the blun? der of pyramiding prices, or com? mits both blunders at once in the guise of bonds floated through bank inflations. "Nor, in fact, is there any bor? rowing method that promises the utmost possible civil contribution to the burdens of war. Patriotic lend? ing or low-interest lending or any lending at a rate of interest, no matter how high, that still leaves the option not to lend must fall short,of transferring to the govern? ment all that the citizen can get along without." There is, as Professor Davenport states, no limit to America's powers cf endurance in the war. Indus? trial and economic exhaustion are .impossible. But there is a limit to current income, and It is certain that we must adjust ourselves to that limit and rely not on credit .inflation but on "production and self-denial." In no other way can the danger of financial disaster be averted. After sixteen months of participation in the war, the gov? ernment is still relying on exhorta? tion to save the labor and materials required for war, but everywhere there are evidences of extravagant spending; saving by one class is off fet by the improvidence of another. But labor and materials must be saved, no matter what the political effects of compulsion may be. Dras? tic taxation on consumption is one ay of bringing it about. I Money and Credit Loan? and discounts of the New York .'Clearing House banks decreased $31, 323,000 during the last week, bringing the total to $4,515,418,000, according to 'he weekly statement made public yes? terday. Moreover, the reserve of these '.'?tjanks in the Federal Reserve Bank .propped $10,804,000, indicating why it was necessary to call in loans. To meet the final payment on the Liberty bonds of the third issue on Thursday and withdrawals of government funds, the DM m banks found it necessary to call many -demand loans on the Stock Exchange ail of last week. United States d?pos? ait? decreased from $522,310,000 to $442, ?49,000. ?* The Federal Reserve Bank of New York, in its weekly statement, reported ?71 increase of some $30,000,000 in bills -??(??counted and bought. The growth of -?this item resulted largely from the -??trlngency of the money market, which made it necessary for member bankers m many cases to exercise the redis? count privileges to an enlarged extent. The aggregate of gold in the vault? of ? the bank and in the settlement fund de ? reased from 1634,660489 to $469,196, ~>5 last we?k. 'Ihe number of certifi Tsrtes of indebtedness bought from the oank? with agreement that they would repurchase in fifteen days increased ,'fourfold dum?g the ?reek. Bank Acceptances, Owing to the firm money market the demand for bank acceptances is somewhat lighter. Rates yesterday were as follows: Thirty Sixty Ninety Spot de- days. days. days. livery: Per cent. Per cent. Per cent. E 1 i g i b 1 e member banks....4A@4 4A@4/4 4A@4^ Eligible i non-mem bcrbanks.4,/4@4!/a 43,8@4i*i 4%@4A j I n eligible bankbills.5'/4@4 6!?@4% 5'/4@4% I For delivery within thirty days: Per cent. Eligible member banks.4'/2 Eligible non-member banks.4^'s Ineligible bank bills. 6 Discount Rates.?The following table gives the current rates of the twelve Federal Reserve banks on commercial paper on all periods up to ninety day ,-Maturity g. r. 3 ? C :aa5 : ? : & ?S3-.? ? ? ? ? ? asfa ? s ? ? ? ? ti.* ? ? ? ? , Poston. 4 4% 4^ New York.4 434 4% Philadelphia.... 4 4% 4% Cleveland. 4!4 4% ?% Richmond. 4% B S Atlanta. 4 4*4 4% Chicago. 4 4% 6 St. Louis.4 434 4?4 Minneapolis.... 4 4% 8 Kansas City.... 4^ 6>? 6!* Dallas..4 4% 6 San Francisco. 4 454 4% Bank Clearings.?Bank clearings In Philadelphia were: Exchanges, $72, 045,328; balances, $14,393,918. Sub-Treasury. ? The banks lost $240,000 to the Sub-Treasury yesterday. Silver.?Bar ?liver in London was 4St?d, unchanged; New York, 99%c, unchanged; Mexican dollars, 77c, un? changed. London Money Rates. ? LONDON, Aug. 17.?Money was unchanged at 3 per cent. Discount rates were: Short and three months' bills, 3 17-32 per cent. Gold premium at Lisbon re? mained 130. The Dollar in Foreign Exchange In a market that was otherwise rela? tively stable francs continued their steady upward movement during the last week. As a result of the efforts of the Allied Financial Committee to bring rate3 on Paris closer to par; which foreign exchange men say are being made, francs rose in the seven day period from 6.67% to 5.64% for cables and from 5.68% to 6.65% for checks. Sterling exchange, which showed much strength a week ago, was easier all of last week and rates on neutral exchanges were consistently weaker. Bankers said that the great Allied successes on the Western battlefront were a factor in the movement of neutral rates. Pesetas moved down? ward again, in expectation of an offi? cial announcement of the progress of the negotiations that are being carried en to secure a loan for the United States in Spain to reduce the discount on the dollar there. It was ascertained last week that an agreement had been reached between the United States and Bolivia to stabil? ize exchange. A $5,000.000 fund, which can be raised to $20,000,000, has been deposited in the name of the Bolivian Minister at Washington at the Federal Reserve Bank, and moneys due Bolivia in this country are to be paid at the Reserve Bank. Canadian exchange remained steady at a discount of 1 31-32 last week and the prospects of narrowing the dis? count have lessened with the depreci? ation of the present wheat crop in the Dominion. In diagnosing the reason for the present exchange situation, Thomas White, Canadian Finance Min? ister, has recently made the following statement: "Owing to many complex causes aris? ing out of the war, and due partly to world-wide conditions, Canada's ex? change with New York, which is the great exchange centre of America, has has been for some time past unfavor? able. The late against us has at timeb exceeded 2 per cent. It is to be pointed out that in this, with war conditions, there is nothing exceptional. Great Britain's exchange with the United States has ror two or more years been at as high a discount, and exchange rates with neutral countries have, in the case both of Great Britain and the United States, been at times unfavor? able to the rate of even 30 per cent, and this upon an immense volume of purchases. Adverse exchange is not an unmixed evil to a country at war. Eco? nomically speaking, it is the natural corrective of national extravagance and of unduly large outside investment of funds needed for war issues at home. "If it costs 2 per cent to obtain New York funds there will be less impor? tation of luxuries and other commodi? ties we do not need and less buying by our people of outside securities offering high interest yields as against the rate of our war issues. An unduly high rate of exchange, however, penalizes the importer of necessary raw material and commodities actually needed by ?the public and, consequently, enhances the general high cost of living, "Judicious interference is therefore justifiable to palliate or obviate its worse effects. To ?ssist in adjusting the balance of our International ac? counts arrangoments have been made which will, I think, bo materially help? ful and at least hold exchange within reasonable bounds. Orders placed in Canada for American war require? ments, such Canadian issues as may be permitted in New York, prohibitions upon non-essential Imports by order ?n council, together with special stabil? izing financial expedients, will all con? tribute to this result." If you calculate the cost of the dol? lar in term? of foreign money at par value -that is, if you were buying dol? lar?- with pound?, marks or francs?itM value at the close of last week, m compared with a year ago, would be about as follows: --Cost of one dollar-^ Yesterday. Year ago. In English money... .$1.02 $1.02 In French money .... 1.09 1.11 In Dutch money.79 .94 In Swiss money. .78 .86 In Swedish money.80 .80 lu Russian money.... 3.85 2.37 In Italian money. 1.69 1.40 In Spanish money.72 .82 Closing rates yesterday compared with a week ago, follows (Quoted dollars to the pound.) Week Yesterday, ago. Sterling, demand_$4.7560 $4.76 Sterling, sixty days.. 4.72% 4.73|/8 Sterling, cables.4.7,660 4.77 Sterling, ninety days. 4.71% 4.72 (Quoted units to the dollar.) Francs, checks.5.65i/2 5.68'/4 Francs, cables.5.64'/2 6.67?/2 Lire, chocks. 7.50 7.90 Lire, cables.7.49 7.89 Swiss, checks.4.01'/2 3.96 Swiss, cables.3.99'/2 3.94 (Quoted cents to the unit.) Guilders, checks_... .51% .52^ Guilders, cables.51% .52/2 Rubles, cables.13.00 13.00 Spain, checks..,..24j65 26.10 Spain, cables. >..24.75 26.20 Sweden, checks.35.50 36.00 Sweden, cables.35.65 36.75 Denmark, checks.31.30 31. i) Denmark, cables.31.45 31.60 Norway, checks.31.50 31.75 Norway, cables.31.65 31.80 Argentina, checks.44.55 44.85 Argentina, cables.44.65 44.60 India, rupees, checks. .37!/s 37.50 India, rupeo3, cablea. .37J/4 37.75 India rupees, cables, Reserve Bank rate...37'/t 35.73 Below Is given the current exchange vajue of foreign money in dollars and cents, together with the intrinsic gold parity, as calculated by the United States Mint? Current exchange Intrinsic value. value. Pounds, sterling .$4.7560 $4.86% Francs.0.17.5 0.1S.3 Guilders, .0.52 0.40.2 Rublos .0.13 0.51.2 Lire, checks. 0.11.39 0.19.3 Crowns (Denmark)... 0.31.40 0.26.8 Crowns (Sweden).0.35.70 0.26.8 The above rates express the cost of foreign money in terms of the Ameri? can dollar. You buy an English pound sterling at, say, $4.7560. The intrinsic parity is $4.86% per pound. Thus you say either that pounds are at a dis? count or that dollars are at a premium, which is owing to the fact that in Eng? land the demand for dollars with which to settle accounts in this country is greater than the demand in this coun? try for pound? with which to settle ac? counts in England. Relevant Comment May Start for Siberia This FalL Observers of conditions in Russia are fretting over the tardiness of Allied i plans for the economic rehabilitation of | the land of the former Czar. It has | been pointed out that the Russian win i ter will soon prove a bar to effective i aid, and it is already too late to make [ use of the Northern trade routes. : There is reason to believe, however, ! that the American economic policy in j regard to Russia is fast drawing to a focus, and an important statement on this subject may be forthcoming this week. Moreover, there are indications that the proposed Russian economic commission will be promptly named ? and may start moving to the emaciated ! Slavic country before the first of Octo i ber. It is considered probable that part of the suggested commission will i sit at Washington and part of it will i go to Siberia and penetrate as far : westward as practicable. The State Department, it is understood, has been I taking a lead in devising plans to aid Russia with life's necessities, but the entire Cabinet has been vitally con | cerned with the matter. Magnitude of Russian Problem Representatives of Russian associ? ations who have been consulted by the I Administration In regard to economic i aid for Russia say that the magnitude I of the problem has been one of the | prime causes of the delay. To effec | tively assist Russia would mean put ! ting some 160,000,000 people on their feet again, and even the mere starting ? of Russians on the road to economic re ? covery looms up as a colossal task. | But those who perceive the importance . of Russia and Siberia as reservoirs of : raw materials for which the nations of ? the world will have the direst need i after the war regard the problem as : one the Allied nations cannot afford to ; shirk. And then, too. the humanitarian | side of the question has been strongly i brought to the consideration of the Ad i ministration. Little Has Been Shipped Until the latter part of June, virtu? ally no American goods were ship? ped to Russia from the time the Bolshoviki emerged from the realm of idle talking into control of the destinies of Europe's largest nation. For nearly six months the flow of supplies was cut off, and during the last two months, as far as known, only a relatively small amount of goods has been shipped there. Though the government is reported to have some? what relaxed its ban on the shipment of goods to Russia in the last two months, no authoritative statement, as to the amount of goods that has been released has been made. A represent? ative of a Russian association esti ma'ed that the amount of ?oods boucrht and paid for in this country during the Kerensky regime which were never shipped from the United States, amounts to $80 000 000. It is pointed out in Bomo quarters that this vast store of materials would make an ex? cellent starting point for trade resump? tion with Russia, and much of it prob? ably would. But, on the other hand, a great part of it is railroad equipment and machinery, which, though they will be needed eventually, are of secondary importance at present to small tools, which are needed at once, compe'ent observers say, to save the population from widespread famine and disaster. Money Strain May Be lessened. The intention of the Treasury De? partment to resume the offering of 4 per cent certificates which may be used in payment of the war profits and ex? cels profits tnxes provided for under the new tax bill is expected to relieve, for e period at least, the strain upon national banks due to the bi-weekly ?ale of Treasury certificates issued In anticipation of tho fourth Liberty Loan. For thin reason bankers predicted yes? terday that there might be a somewhat Federal Reserve Banks ? WASHINGTON, Aug. 17.?Discount operations of Federal Reserve ?ank8 in the last week were somewhat less than the previous week, bills on hand ,at th close of business last night amounting to $1,497,000,000 as compared with $1,541,000,000 a week before. Members' reserves increased $44,000,000. The Federal Reserve Board's weekly summary of the banks condition last night follows i RESOURCES Gold coin certificates in rault. Gold settlement fund (F. R. Board). Gold with foreign agencies.-. Total gold held by banks. Gold with Federal Reserve agents... Gold redemption fund.< August 16. $385,017,000 600,083,000 5,829,000 $990,929,000 961,498,000 40,116,000 August 9. $395,410,000 606,854,000 9,696,000 $1,011,460,000 940,692,000 38,149,000 $1,990,301,000 54,222,000 Total gold reserves. $1,992,543,000 Legal tender notes, silver, etc. 52,980,000 Total reserves. $2,045,523,000 $2,044,523,000 Bills discounted-members. 1,285,368000 1,332,473,000 Bills bought in open market.-.. 212,204,000 208,567.000 Total bills on hand. $1,497,572,000 United States government long term securities 31,497,000 United States governm't short term securities 32,546,000 All other earning assets. 82,000 $1,541,030,000 34,931.000 17,404,000 102,000 Total earning assots. Uncollected items. $1,561,697,000 $1,593,467,000 623,495,000 584,758,000 Five per cent redemption fund against Fed? eral Reserve Bank notes. All other resources. 866,000 10,803,000 735,000 11,410,000 Total resources._.?. $4,242,384,000 $4,234,893,000 LIABILITIES Capital paid in_.~?. 176,906,000 Surplus .'*.. 1,134,000 Government deposits. 95^55,000 Due to member banks?Reserve account.... 1,464,011,000 Collection items. 461,202.000 Other deposits, including for'n gov't credits.. 115,234,000 Total gross deposits. $2,136,082,000 Federal Reserve notes in actual circulation.. 1,985,419,000 Federal Reserve Bank notes in circulation, net liability. 15,167,000 All other liabilities.-. 27,707,000 $76,876,000 1,134,000 179.976,000 1,420,705,000 433,347,000 127,050,000 $2,161,088,000 1,955,276,000 13,736,000 26,811,000 Total liabilities. $4,242,384,000 $4,234,893,000 Ratio of total reserves to net deposit and Federal Reserve note liabil? ities combined 58.5 per cent. Last week 57.9 per cent. Ratio of gold reserves to Federal Reserve notes in actual circulation after setting aside 36 per cent against net deposit liabilities 76.4 per cent. Last week 76.3 per cent. Federal Reserve Bank of New York The weekly statement of Federal Reserve Bank of New York, as of Au gust 16, compared with a week ago, follows: RESOURCES Gold coin and gold certificates: Gold in vaults and settlement fund. Gold with F. R, agent and in redemption fund?F. R. notes. Gold with foreign agencies. August 16. $459.196.215 293,539,415 2,010,962 August 9. $534,660,189 294,022,815 3,345,217 Total gold reserve. Legal tender notes, silver certificates and subsidiary coin. Total reserve................ Bills discounted and bought: Rediscounts and advances ? Commercial paper . Rediscounts and advances?U. S. obli? gations . Acceptances bought...?. $754,746,592 $832,037,222 43,941,930 44,948,867 $798,638,522 $876,986,029 143,857,706 127,000,257 298.207,051 112,691,695 285,454,891 113,105,840 Totals $554,756,453 $525,560,989 Investments: United States bonds and notes. U. S. certificates of indebtedness purchased from the banks with agreement to repur? chase in fifteen days. Municipal warrants. Totals . Due from other Reserve banks. 20,192,150 50,520 $20,242,670 5,043,450 50,520 $5,093,970 Total resources ... LIABILITIES Capital . Member banks' deposits (net). Non-member banks' deposits (net). Government deposits . Due to other Federal Reserve banks (net).. Due to War Finance Corporation. Federal Reserve notes (net). Foreign government accounts. Other liabilities. ?jrplus. Total liabilities . Federal Reserve notes outstanding. Against which there is deposited with Federal Reserve agent: Gold and lawful money........ Commercial paper. $1,373,687,646 $1,407,641,049 $19,999,000 574,120,731 3,260,666 7,523,701 16,594,716 1,119,508 640,877,920 103,634,656 5,907,383 649,363 $1,373,687,646 691,971,650 278,539,415 554,756.453 $19,988,580 592,696,966 3,431,973 25,595.465 4,874,057 8,882,419 638,916,820 107,467,298 5,193,184 649,363 $1,407,641,049 696,796,960 279,022,815 525,560,989 New York Clearing House Banks The actual condition of the member banks, shown by the yesterday, with the changes from the preceding week, follow Loans, discounts, investments.$4,515,418000 Cash in vaults of Federal Reserve members... 97,191,000 Reserve in Federal Reserve Bank. 489,122,000 Cash in vaults of state banks and trust co's.. 11,540,000 Reservo in depositories. 8,222.000 'Net demand deposits....???... 3,611,636,000 Net time deposits. 161,814,000 Circulation. 35,593,000 Aggregate reserve ............ 508,884,000 Excess reserve ..... 30,074,080 Clearing House s: Dec.$31,333,0OO Dec. 2,489,000 10,804,000 424,000 571,000 5,974,000 2,910,000 143,000 9,809,000 Dec. Inc. Inc. Inc. Inc. Dec. Dec. Dec. 10,765,300 ?United States deposits deducted, $442,949,000. j easier tone to the local money market ! '. during the next few weeks. Figures i ' made public at the Federal Reservo! Bank showed total payments for this ' district on the third loan of $62,687,- ! 418 up to the close of business on Fri- I day. The total due is $73,919,088. Re ports from seventy-three banks have j not yet been tabulated. General Motors Active ? Activity In General Motors has not ' I thus far been materially curtailed by I the ruling of the Stock Exchange clearing house committee that here after the common stock shall not be j cleared under the direction of that body. Yesterday's dealings were un? usually heavy, considering the high price at which the stock is selling. On a turnover of 2,600 shares the quota? tions rose from 154% to 156%, with the final at 156, a net advance of 2 points. September Maturities Corporate maturities for September, according to a compilation by Dow, Jones & Co., aggregate $47,203,790, compared with $43,826,660 in August and $50,729,963 in September, 1917. The character of the obligations falling due and the condition of a majority of the issuing companies, it is declared, make it unnecessary for them to call on the War Finance Corporation for aid to any great extent. Railroad issues total $33,529,170. of which $15,000,000 consist of $15,000,000 Chicago & West? ern Indiana 6 per cent notes, due Sep? tember 1. Tho company is now negoti? ating with the railroad administration for a plan to pay off these notes. Boston Clearing House Protest Opposition from bankers In other cities to the recent ruling of the New York Clearing House Committee plac? ing a collection charge of one-tenth of 1 per cent on out-of-town bank accep? tances passing through the clearings, has developed into official action by the Boston Clearing House. This body has adopted a resolution protesting against the charge as "being excessive, un? necessary and contrary to the tendency everywhere prevailing to reduce charges for exchange to a minimum.' The Boston Clearing House committee ?3 instructed to send a copy of its me? morial to the Federal Reserve Boarc at Washington, to the governor of th? Federal Reserve Hank at Boston and tt the chairman of the Clearing House committees at New York, Philadelphia Chicago and St. Louis and "to tak< such further action as the members o the Clearing House committee deem: best to bring about a chango in thi regulation above cited." Allied Powers of War Endurance Without Limitations Save Those Imposed by Unsound Financing With America's Vast Resources Thrown In, Conflict Could Be Carried On for Centuries Without Danger of Economic or Industrial Exhaustion if the Nation Would Abandon Present Improvident Methods of Credit Jugglery H. J. Davenport Professor of Economic? in Cornell University | THE debt of England is now nearing $40,000,000,000? $1,000 per capita, $5,000 per family. This, however, need! not mean that England has now be- ! come a poor nation or even is on the way to become a poor nation. In the main, the English debt is held in England. The aggregate wealth of a country is neither'the less nor the greater because of do? mestic debt relations. It is only with respect to the ownership of its existing wealth and to the dis? tribution of its future income that the volume of Indebtedness is sig? nificant. For every debit there is a credit. Cancel the debt, and as much as the debtors are richer the creditors are poorer. Increase it, and as much as the creditors are the richer the debtors are the poorer. In a national accountancy these items of domestic debt are neutral items. In an inventory of national wealth they cancel out. Nor in any other aspect of wealth need war mean national poverty. Rarely doe3 war seriously diminlsn wealth. The lands of England are still there, unwasted and unworn; its factories wanting nothing in equipment, its warehouses nothing in goods, its dwelling houses unde cayed, its railroads intact and with ample rolling stock. At any rate, deterioration can hardly be ap? preciable, and if appreciable can hardly be serious. The war toll of life has been heavy. But this means that the rate of loss in life has far outrun the rate of loss in wealth. Stated in terms of per capita wealth, England may to-day be richer than before the war, rather than poorer. Redistribution, Not Exhaustion How, then, can England a yeai ago have been approaching, or be now approaching, war exhaustion ? Ii may be easy, no doubt, for any on? man to lose his wealth?the heir tc dissipate his estate, the borrower tc become insolvent. But what ont man loses to another's gain does noi impoverish the realm. So, again it may be easy for any one indi vidual to consume more than hi: income and be compelled to dispos? of his property. But the main ef feet of this is merely to redistribu?? tho property. Speaking in the large the prodigal consumption of on< merely displaces the consumption o: others; and these others, as thei indemnity, come into possession o the prodigal's estate. And as with any individual in i society, so with any one natioi among nations. One country ma; get into debt to another. Or, in stead of issuing obligations agains its existing wealth or its future in come, one country may sell out t another the titles of proprietorshi to its domestic wealth or to it wealth of foreign investment. Bu nothing of this involves any chang in the total of world wealth, bu only a redistribution of it in poin of ownership. England has, no doubt, grievousl ' diminished its patrimony, not onl by the sale of war bonds in Americi I but still more by marketing enoi : mous holdings of international s< ! curities in America. And note als that all these sales of securities i America by which England ?3 s much the poorer relatively to Ame | ica have gone none the less to swe I the government debt to individu: investors in England, the debt c which the taxpayer must make goc the interest burden. The investo: are no poorer, but only Englan. They now hold English consols i place of the securities that ha^ : been marketed abroad to furnn i England with purchasing powt here. By marketing its new issui of consols here, or by selling he: the securities purchased in Englar by consols marketed here, Englar has supplied itself with Americi goods far in excess of what Englii exports of products would buy?? export of obligations and titl rather than of products. Instea therefore, of its old position i creditor abroad or of owner abroa England has been moving towa: the status of a debtor nation. What England Lost America Gained But all this is only for that sha of England's war needs that has hi to be financed abroad. In the mal England's industries and Englanc current income of products, rather | than England's accrued wealth or| foreign credit, have financed its war. | Only to the extent, then, that bonds j have had to be sold abroad or se- j curities marketed abroad is Eng- ! land now the poorer for its four years of stupendous effort. And [ even so far as England has been j compelled to sacrifice its patrimony,! no serious reduction of wealth has taken place. As rapidly as England has been growing poorer in the process America has been growing richer. The aggregate resources of the two countries remain substan? tially unimpaired. The war has been financed out of current in? come on terms of the sacrifices and privations made necessary in civil consumption, not in any consider? able part through the deterioration or the consumption of the existing stores of wealth. Taken as a whole, the Entente has not been nearing economic exhaustion, is not now nearing it, never need near it in the future, and only by gross blun? dering can ever near it. The fact is that in the large and in the purely industrial aspect war has only a present tense. Any one country, it is true, can sell its pres? ent accumulations of wealth held over from the past to the end of obtaining a present increase of war supplies, or may mortgage abroad its future income in order to induce the assignment of present product to it. But none the less is it clear that in the main only present product can be consul"od in the present. Future bread cannot be eaten now, or future cannon loaded now, or future powder exploded now, any more than future men can man the trenches now. ??or in the main can the products of the past supply the needs of the present. Few of these products will keep, and most of them that will keep are not consumable for war purposes. We cannot eat or wear or explode lands, or houses, or factories, or machines. Most of these forms of wealth avail for present needs, not as themselves fit for consumption, but as rendering incomes of con? sumable products. For the world a? a whole, and especially for a world at war, the things of the past equally with the things of the fut? ure are not at the disposal of pres? ent needs. True, some degree of wear-out or deterioration is possible ; but it cannot be allowed to pro? ceed far and cannot count for much. Present Income j All That Counts So again, a country may, in some slight measure, have prepared for war by storing war bread or by making accumulations of armament and munitions. But these can last only for the early beginnings. In the large, it still holds that neither the products of the past nor the products of the future but only the present incomes of product can sup? port a present war. Society as s whole has to live off its current in i come. It is, in short, a profound mis? understanding to suppose that wai ' can destroy much wealth or make I any serious inroads on wealth. 11 ! destroys income?subtracts mer j from current production and ah ?sorbs in military uses much of th? current product that else woulc ? serve for civil consumption. Onlj j in the sense of preventing an in i crease of wealth or of the limit?e ' degree in which it prompts to de? terioration or wear-out or tempts t( i some degree of incidental or wantor ; ravage can war subtract from th< | present sum of human possessions I Its chief significance, clearly, is ii i its encroachments on present con sumption for ordinary needs. Th? * piivations that war imposes have t< ' be borne now?present hardship ; not past or future hardship. It is noi : through the lack of farms or textil? ! machines that wo suffer now, bui j only through the lack of current ; crops against hunger and of curren' I textiles against cold. In truth, the j improvidence of deterioration, ii j whatever degree it is possible anc ? is permitted, is in its prompt reac tion to limit correct income. Men Not Wealth. j But Owners of It ? War consumes men, no doubt and at a frightful rate. But the mei are not a part of the existing wealth they are the owners of it. It is, in deed, not incredible that with th? reduction of the world population through casualty massacre and ft? ine, the world is to-day even richer per capita than it was four year, ago. All these war burdens mean, then substantially nothing in terms of their effect on the sum of existing wealth, either for increase or fot decrease. But they mean much for the distribution of the ownership of existing wealth and still more for the distribution of the future in come from wealth and from human labor. The children of some of us must pay interest to the children of others of us. The bonds are obli g?tions of the people in general to the bondholders. By virtue of hold ing these incumbrances on the fut? ure revenues of the government revenues which are to be collected partly out of future property in. comes and partly out of future in comes from human effort?the in vesting classes are holders of mort? gages on the wealth and the man power of the country. It is no part of the immediate task to inquire how far the issue of these bonds is well or ill, fair or unfair, necessary or gratuitous, in the policies of war finance. There are men enough to believe that, having to get the funds somehow, we cou'd get them In no other way? thr t how much we can collect from the citizen depends not on what share of his income he can spare above his necessities, but rather on the nature of the slip of paper that he receives in settlement of his pay? ment, whether it be a receipt or a promise, refers to past or future, evidences release from obligation or acquirement of obligation. Bonds and Endurance The question of immediate inter? est, however, is quite another. What do these bonds mean to any nation for purposes of war endurance? h purely economic and industrial as? pects, war needs not carry with it any menace of exhaustion. Man power may be lacking to go over? seas to the firing line, or man power may be lacking at home to maintain the soldiers on the firing line. More men may be call i to the colors than the civil population can maintain. In any of these ways economic d?? b?cle may befall. But never need it be a question of the progressive sapping of the property resources of any country that must rely or does rely on its own productive powers. Economic exhaustion, wealth exhaustion, is one thing financial exhaustion another and a quite distinct thing, no matter htm constantly they may get confused. The Entente is not now nearing economic exhaustion, and need nev? er near it. The warring countries are safe from seriously compromis? ing themselves in point of wealth? for the sole and sufficient reason that they cannot. The Limits ! Of War Effort But they are in serious danger ! of using up their credit?precisely because they can. Tempted by the delusive ease of credit extension, we may engage our?elves in effort* and undertakings disastrously be? yond our powers of maintenance and performance. Economic po?r has economic limits. Two nun?? men are costing us now?with oor other tasks?eighteen billions ? year, $9,000 per man; and yet, wit? fifty billions of annual national in? come, we are talking of placing ' 000,000 men in the field and of se1*' ing at the same time as base of sup? plies for our associate nations in t war. Again it is possible to hj* floated so many bonds that we ? it impossible to float more. We W reach political upheaval by ??PJ ing sacrifices unfairly or by ?** ing them impossible or intolerable^ Continued on r^V* tu'elvt Correspondence Invited We invite correspond?!? *" lfcJ? market commitment and ?" vestment subjects. Freqvf* ?? hdcal reports issued and **"? gratis. Special n>eekb colion%, 1er and grain review upon r?J0?" E.W.Waqner&CO; Member? New York Stoc* *,r"*f 33 New St. ??,ho??, llro?d **09, "' Mr Seeuritv ?? "??