158 
WAR BORROWING 
The preface of Pigou’s book is dated October, 
1916. In December, 1916, at the meeting of the 
American Economic Association held in Columbus, 
Ohio, an eminent American economist, Professor 
O. M. W. Sprague of Harvard University, pre 
sented a paper on “ Loans and Taxes in War 
Finance ” wherein quite independent of Pigou’s ex 
position the inflationist argument against funding, 
foreshadowed in certain of the speaker’s earlier 
writings, was set forth in detail. Admitting that 
“ it is not absolutely inevitable that war finance 
based on borrowing should cause a general rise in 
prices,” Professor Sprague noted that “ it is signifi 
cant, however, that whenever governments have re 
sorted to this policy prices generally have manifested 
marked and continued upward tendency.” 
Professor Pigou’s and Professor Sprague’s views, 
spoken with some measure of scientific restraint, 
were received with attention if not assent within 
expert circles. They were given circulation and 
vogue by the lamentable Minnesota “ memorial of 
American economists to Congress regarding war fin 
ance,” an ill-fated attempt to determine congres 
sional action upon the then pending war revenue bill 
by arraying the body of academic economists in 
support of such propositions as: 
“ It may be necessary for a month or two at the outset 
to issue a limited amount of bonds, pending the collection 
of increased taxes, but beyond these, which might well be 
made repayable within a year, no necessity for bonds 
exists.” 
Thus far the inflationist doctrine had circulated 
as an academic hypothesis. In April, 1917, it was