4

WAR  BORROWING

sustained  though  it  has  been,  has  had  to  do  almost
exclusively  with  the  relative  extent  to  which  public
borrowing  should  be  used  in  war  finance,  to  the
virtual  neglect  of  the  particular  manner  in  which
such  borrowing  should  be  effected.  Interest  rate,
maturity,  amortization  are  details  of  fiscal  technique— ­
  the  determination  of  which  must  in  the  last
instance  be  left  to  the  financial  administrator.  But
there  are  larger  and  more  fundamental  problems  of
war-time  borrowing  which  may  not  be  so  dismissed.
Shall  the  nation  raise  its  loans  by  long-term  obligations ­
  absorbed  directly  by  public  subscription?
Shall  the  borrowing  be  in  the  form  of  temporary
loans  discharged  or  renewed  from  time  to  time  as
maturing?  Shall  the  proceeds  of  popular  long-term
loans  be  anticipated  by  short-term  bank  borrowings?
Each  policy  is  attended  with  distinctive  consequences, ­
  not  only  as  to  the  supply  of  public  funds
but  as  to  the  wider  effects  upon  national  industry
and  economic  well-being.
Upon  one  of  these  courses  —  short-term  borrowing ­
  in  anticipation  of  the  proceeds  of  funded  loans
—  our  own  country,  following  hard  upon  recent
European  experience  rather  than  traditional  American ­
  practice,  has  entered.  If  not  unconsciously
chosen,  there  has  been  at  least  little  public  comprehension ­
  of  this  procedure  and  even  less  examination
of  its  consequences.  The  close  of  the  first  phase
of  our  war  financing,  with  the  prospect  of  further
extraordinary  expenditure  imminent  enough  to  jusfor
  War,”  papers  presented  at  the  joint  conference  of  the
Western  Economic  Society  and  the  City  Club  of  Chicago,
June  21-22,  1917.