The Washington herald., 1914-11-07
The Balance q Trade.

of trade is considered In its superficial aspect Il is
the amount owing by one country to another or
from one country to any number Of foreign coun-
tries, the net balance of commercial transactions
at given time The great diiculty about the matter
Is in estimating just what this balance OF trade is
This is because there is mind nor aggregation
of minds that can possibly exercise such con-
spectus of all the elements bearing upon the foreign
trade situation at any moment as to allow of the
proper balance" being drawn. For instance the
figures gathered by our government as to the value
of our imports and exports of merchandise in any
one calendar year may show a heavy balance in our
favor. As matter of fact this favorable merchan-
disc balance has run into hundreds of millions of
dollars each year for long period in the past I'm
der these circumstances il is question that proves
perplexing to great many people as to just why
we have had to export gold in great quantities in
this period in order to settle foreign claims against
US. Europe ostensibly great deal of money,
but when the time comes for settlement the United
States has send gold to Europe instead of receiv
ing gold from Europe.
The reason for this is that the government figures
as to the movement of merchandise only comprises
the visible and tangible movement of material mer-
chandse and takes account of transactions which
play no part in commercial trade relations. For in
stance the government statements do not attempt to
place any estimate upon the purchase sales of
curities here for European account or for the pur
chase or sales of securities in Europe for own
account, and yet it is clear that on all these pur-
chases a large net balance may exist either against
or in favor of the United States and also, that this
balance may be offset by that made by the movement
of merchandise and articles of commerce. For in
stance Europe may owe us $Ioooooooo for cotton
purchased by English spinners, but may owe Eu-
$5ooooooo for quantity of our stocks and bonds
previously held in Europe and offered for sale here
in the period for which the balance is drawn Part
of the general balance is, thus, something that can
be estimated and part of it is something that
be estimated because it refers transactions of
which no report is made. Private loans may be
negotiated between bankers of the different coun-
tries as to which there may be good deal of secrecy
Our country is still in the main what is known as
debtor nation We have remit each year to people
in foreign countries a vast deal of money in pay
nent of interest and dividends (S5oooooooo is the
igure usually estimated covering these ites for
marine, and fire insurance, for the expenses of our
oreign Travellers and for other debts of multiform
sort.
1t is now plain that in the last year. and indeed !
n the last two years, there has been much quiet |
elling of stocks and bonds by European holders
n preparation for the great war in Europe that is
ion was not because the present war was actually |
oreseen, but because it dimly suspected and
cared 1t is probably the case that selling of this
ort came more from Germany than from any other
European country. The German bankers realized /
more fully than anybody else that near at
and They did not know just when the would
reak out, but they more than suspected that the
our for the conflict about to strike when the
ssassination of the Austrian Archduke Ferdinand |,
ccurred at Sarajevo There is no question what
yer that this event resulted in extraordinary in
rease of German selling of securities on the stock
xchanges outside of Germany; and it undoubtedly
lso resulted in a large temporary accumulation of
1erman financial credits in other countries, and
otably in own.
But the indications are now that these German
redits well foreign credits generally that had
ccumulated in this country up to the time of the
utbreak of the war, have been greatly diminished,
nd, so far as Germany is concerned, practi-
ally nonexistent The for this is that having
rst built up heavy credit balances here through sales
securities, Germany France, and England
ave drawn upon these balances as the war has pro-
ressed to pay us for merchandise necessary for use
the war that they have purchased in country.
'hese purchases have amounted to gross sum in
olars and cents running into large figures The de-
lands for cotton have been restricted for that
eed no explanation; but purchases of cotton
re charging We cannot see but that as the
'ar goes the foreign purchase of merchandise
ere steadily increase All of Europe is in the
iarket here for foodstus on a scale not witnessed
efore in the present generation. Munitions of war,
course are bought in large quantities by England
nd France; but the articles purchased comprise
iany classes beside those of foodstufs and war T.,
ecessaries Even war necessaries, it must be re-
lembered include such articles as horses, harness
nd trappings, shoes for soldiers timed meats, and
agons and motor trucks in vast quantity. Although
Ie-rnan ports are closed, German merchants are +;
aKng heavy purchases here of articles that cannot
E classed contraband of war, and to avoid any .
ossibe trouble these commodities are sent to Ger
lany through Holland. The general agent of the :
Steamship Line is reported as say
g that the company has had to charter as many as =
,urteen steamers to keep tonnage moving There 1
doubt most Of this tonnage was for German +
count l.
We strongly inclined to the opinion, there
pre- that in short time the foreign exchange situa-
on, which few weeks ago weighed so heavily .
yainst US, will soon weigh just as heavily in our
vor. The stock exchanges in London and New
ork still closed, but even when they open we