The Hawaiian gazette., 1914-05-05
OUTLINES EFFECT
. OF WAR ON TRADE
Henry clews Declares Financing
OF Campaign Would be
Easy Matter

Henry Clews discusses the probable
effect Of war with Mexico in his
trade letter Of April 25. His letter in
part, says: ~
Financing Of the wa would prob.
ably be accomplished through stamp
taxes and the issue to start with Of
three per cent short Treasury notes
which could be readily marketed. some
other forms of taxation may also be
necessary. dfibe sugar duties might be
restored or a tax imposed upon coffee
and tea. In addition to these pro.
posals, some Of which may not prove
acceptable, the expectation Is that the
Government will make a liberal bond
issue on q basis Of three AMI one-half
per cent. II Is practically certain that
an issue on these lines would be
promptly absorbed. OF course bond
issue would withdraw capital from
other and more productive directions,
and might temporarily. depress the
general bond market.
= There is, however, no lack Of cap.
ital seeking desirable investment. and
the Government bond issue for carry
ing on war with Mexico would have
little harmful effect. Mexico will be
unable to secure any considerable
amount Of foreign capital for carrying
on the war, factor which would
hasten prostration in Mexico and tend
TO shorten the period Of hostilities. ItI
is generally argued that because the
stock market made a sharp rally after
the opening Of the Spanish wa, sim,
liar results viii follow the opening u
hostilities in Mexico. In support Of
this argument it is said that the Mex.
lean difficulties have already been fair
W well discounted and that prices arc
already low owing TO the combinations
with other depressing factors. Prices
of the active stocks are now down To-
about the low point Of November, 1913,
all Of the advance obtained in Janu.l
airy having practically disappeared
Revival OF General Trade.
"Outside Of the Mexican incident,
there is little change in the financial
situation. There is partial revival
OF general trade in the West.
"Crop conditions are still remark.
ably satisfactory in spite OF back.
ward season. From all parts or the
country reports come that the soil is
in excellent condition.; and winter
wheat continues TO maintain It's ex-I
eeptionally high stand in nearly ali
sections. Our textile trades are still
somewhat depressed by curtailed con.
sumption. low PRICES, labor problems
and tariff uncertainties. General trade
Is fairly wen maintailed, but deciin.
iing prices have in many eases made
rather serious inroads on profits.
IA somewhat firmer TOM exists ia
the money market, rates for both time
money and commercial paper having
slightly advanced. There has been
sonc expectations Of gold exports to
Paris, but these may be Offset az any
time by the prospects Of Government
bond issue at home. Home politics as
a factor have for tho time being been
overshadowed BY the seriousness Of
the Mexican outlook, and nothing
further has developed in the rate sit,
uation. ,t
1.-The foreign outlook is not entire
~ satisfactory. Russia is in fear of
fresh revolutionary difficulties. Aus
ira Is fearful OF international compIi.
cations which might asise in event of
the aged Emperor's death. Paris is
still feeling the after effects of the
hate European financial strain, and
'threatens to draw upon us for gold.
london is in fairly good shape because
of Britain 5 extraordinary prosperity;
yet is In q very cautious mood and de,
eidedly critical toward our Mexican
policy Mexican securities have de-
elined considerably in that market.
which is much more pessimistic re-
garding the consequences of war than
ourselves.
War Diverts Attention.
sMuch as the Mexican outbreak is
to be deplored, 1t will have the effect
OF starting new activities and divert
ing public attention from ills upon
which il has been brooding far too
long The nation, 10 is true, has
serious domestic problems TO solve.
This has always been the ease and al
ways will be. Business, however, must
go on. Food, clothing and shelter
must be provided under all circum.
stances. and while enterprise and new
development have been temporarily re.
strained the regular activities of life
are going on much as usual. II must
be remembered that the market has
very literally discounted the unfavor-
able conditions, and In ease of favor
able developments, we would see
general recovery in this market. Pres
'ident Wilson, il Is TO be noted, still
insists at tms writing that our Govern
ment has not as yet declared war
against Mexico. Nevertheless the out
link Is far from clnnr and IN ,,in,, nf