ROLLING IN WEALTH.

Lake Wakatip Mail, Issue 3222, 9 January 1917, Page 5

ROLLING IN WEALTH.

AMERICA'S WAR HARVEST. THE SPECULATION MANIA. The heavy finarv ia! strain which the war has brought to ait the great rowers of Europe has made the United States .so rich that Americans themselwes are amazed (says the Washington correspondent of the "Morning Post"). From having Leen a debtor nation they have made the world their creditors. Every belligerent and nearly all the neutrals have either liorrowed money or credits in the United States. No exact figures are available, but reliable authorities assert that since the beginning of the war the United States has lent, approximately £400,000,000, and has repurchased from foreign holders American securities of an equal value. In addition about, £140,000,000 in gold has been imported. The immediate effect is a stupendous increase of national wealth, and it is accompanied by the two phenomena that are inseparable from suddenly stimulated and unnatural prosperity, that is, high prices and inflation. Economists have calculated that the purchasing power of the dollar has been reduced by 30 per cent., compared with ten years ago, but the working man is indifferent, because his wages, in many cases, are 100 pet; cent, or more higher. UNIVERSAL GAMBLING.

Colossal fortunes have been made during the past two years, because the profits have been stupendous. The knowledge of these great profits has powerfully seized public imagination. Almost everything that the Allies bought for war purposes can be gambled on the stock and other exchanges. Shares of steel and other' companies have only to be bought and held for a short time, frequently not more than a few days, to be sold at a profit. Speculation is epidemic, and the public has been attacked by it. Following the raid of C 53 oil' Nan tucket a great many men and women—for women are plunging almost as recklessly as men—with snug profits on paper lost, not only their prospective profits but their capital; but those little set-oacks, instead of discouraging speculation, really accelerate it.

THE FEDERAL RESERVE LAW. There arc a lew men economise and close studente of financial affairs, who so'. 1 the daager and utter their warning, but their voice is like that of p. prophet crying in the wilderness. No one gives heed becau.se no one wants to believe, it in ironical that at the very time when the United Slates least needed gold it should* be deluged with the gold of the world, and the gold that all the rest of the world is guarding so carefully is today the greatest menace to America. At the outbreak of the war the Federal ileserve law came into operation. Lor half-a-cemury the United States nad been throttled oy an unscientific, iuelas.ic currency system, which, with almost? the regularity of the seasons 'produced money panics and financial disturbances. The new law provides an e.asiic currency responsive to the demands made upon it, which ougnt to make contraction and stringency virtually impossible if judiciously used; many men feared it was inviting Luilaiion. Now comes this great inllux of gold, for which there is no economic need. Gold that does not work is as profitless as an idle servant, and only an item of expense; io save himself from loss and make a profit the banker must put his gold io labour. The stock of 7U0,000,000 dollars in gold represents a credit of from 2,800,000,000 to 3,500,000,000 dollars; on a reserve of from 20 to 25 >per cent. in gold there can oe issued 10U per cent, in credit.

INCENTIVE TO INFLATION. Here, then, is not only the temptation to inflation, but the direct incentive, and some of the best-informed observers are convinced that there is to-day greater intlation in the United States than any other country ha* ever known. It sounds paradoxical to say that a boom resulting from too much gold is as clangorous as expansion created by the unlimited issue of uncovered jsaper money, but it is uevc-rtheiesjj the truth. Whenever paper money lias been issued without limit and without cover high prices have always followed, and there has been seemingly ' unexampled prosper-Lt-v until the uni>h came.

No one, of course, questions the fundamental economic strength of the United States, bui as even the strong- ('.-[• niau may he strkken when he flagrantly defies tiie laws of health, so a country with such enormous iire-sent and potential resources as the United States may have to pay the penalty when it gorges it.s financial system with too muoh gold. |