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WAR  BORROWING

loan  borrowing  repeats  the  important  advantages
and  avoids  the  conspicuous  disadvantages  of  certificate ­
  borrowing.
But  there  is  a  further  advantage  in  favor  of  the
installment  loan  as  contrasted  with  certificate  borrowing— ­
  the  check  upon  popular  non-essential  expenditure. ­
  A  glaring  fact  in  the  war  experience  of
the  United  States,  as  of  every  belligerent  state,  has
been  the  imperfect  appreciation  of  the  doctrine
that  national  effectiveness  means  spending  less,
quite  as  much  as  producing  more,  and  that  every
unit  of  productive  force  required  in  supplying  dispensable ­
  needs  —  every  ounce  of  raw  material,
fuel,  convertible  machinery  engaged  in  making
things  and  services  without  which  we  can  subsist
is  just  so  much  reduction 1  of  the  nation’s  war
power.
Much  has  been  said  and  written  of  the  usefulness
of  heavy  taxation  in  war  finance  in  correcting  this
tendency,  and  such  is  undoubtedly  the  case  if
taxation  be  widely  distributed.  That  part  of  the
national  income  surrendered  to  the  state  in  taxation ­
  which  would  otherwise  have  been  needlessly
consumed  effects  a  corresponding  release  of  productive ­
  energy  for  the  national  defense.  But  it  is
equally  certain  that  the  same  result  can  attend
borrowing  and  that  the  largest  part  of  that  which
the  Treasury  receives  from  loans  can  come  from
the  income  rather  than  from  the  credit  of  those
who  subscribe  to  bonds.  This  is  the  distinction
between  “  credit  loans  ”  and  “  savings  loans.”  If
bonds  are  paid  for  out  of  current  income  that
would  otherwise  have  been  spent  upon  non-essen ­