The Washington herald., 1914-08-29
COMMERCE AND FINANCE

Europe experienced during that time
something that might be compared With
a universal suspension OF all the banks
at one time, so that the entire machinery
or commerce was out Of commission The
moratorium was an emergency measure
to prevent many thousands Of really SOL
vent people from becoming technically
bankrupt, owing to the maturity OF debts
at a time when the money to pay theua
was not available owing to extraordinary
causes.
While the phrase. therefore, Is new to
the majority OF people, the principle Of Q
moratorium Is not new 1t is exactly on
the same principle that from time tot
time in great currency famine, whsa
the reserves OF the banks run low, we
issue in the principal cities Of this coun-
try clearinghouse certificates, which mayi
be used in lieu Of money. II is con-
templated In every case that ultimately
real money viii be paid for thes csr-
uhcates and they will be redeemed and
retired. Their use. therefore, Is merely
a delay in the delivery Of the real money,
Similarly. in an emergency, # is provided
that savings banks, which ordinarily pay
out cash on demand to their depositors,.
may put INTO effect a siXty-day clause
and refuse to pay out except on a sixty
day notice. A similar provision Is Incor-
rorated in many life insurance policies, ?
so that the companies may. II necessary
demand notice of any one who desires to
borrow under the policy, as he is legally
entitled to do.
The principle of all these extraordinary
measures, every one OF which has been
used in the present crisis. Is the prin-
ciple of delay. so as 20 obviats an de-,
mands for money. The Latin word mora
means delay. and the long deriyativs. /
which has appeared so much in the news |
papers this summer. may be translated9
into that simple Anglo-Saxon word
Having discovered the meaning Of that
word. it might be well to glance at itsl
possible effects When a foreign gov-l
eminent starts with a thirty day delay in
the payment of debts due by one indi-I
vidual to another, or by one business to-
another. the same government may, aet
the end OF that thirty DAYS, If conditions |
seem to Justify il. extend the payment
still further. This has already been done
in some branches of business on the
Continent. The effect Of a continued usal
of this curious mechanism. therefore,
would be TO pile up a great accumula-
ton Of commercial debts, which must BE-
paid at some future time. There can be
no denial Of the fact that the duration
OF the various moratoria in Europe Is
being watched very anXiously by fnan-
cial people. and many men are wonder
ing how long il will take to clear up
the accumulation OF unpaid and extended
debts if the conditions OF today CONTINUES
TO run along for months TO come.
OF course. men who are selling real
goods and who have always been in the
habit Of accepting bills and other evt-
dences Of debt in payment for the same
cannot do their natural business under
the present conditions; for. instead OF
getting their payment In 90. 50. or 80
days. as the case may be, it Is not at
all impossible that the payment will be
delayed for months. Such a dislOCation
Of the mechanism Of exchange obviously
ruins business. which becomes. instead OF
a nicely adjusted mechanical process. q
primitive and very awkward exchange OF
commodities for real cash paid on the
nail, so to speak How serious such q
matter is may best be left to the i'm
aginatiOn.
Ii is hard to say whether it is wise to
be hopeful at the present time or not
Certainly matters are progressing. Tbs
leaders ~ business = ave kept their heads
reasonably well and are working hard
toward Establishing the machinery OF
International trade Perhaps within a
few weeks commerce will flow naturally
across the Atlantic. particularly between
the markets Of Great Britain and the
markets Of the United States Until thaH
happens, however one may saw thaS
there is a moratorium not only in the
payment ~ deb:s. but also in the crea-
ton OF them by the interchange of COM
merCe between one country and another.