The Birmingham age-herald., 1914-09-03
The American Situation
 With All Markets Closed
The Condition As It Relates to Money, Stocks, Cotton and Grain-What the SO- luti0n Is.
By HOLLAND

nations, even Mexico, nevertheless we have begun to carry on ap economic or trade war which in it's fundamental prin- ciples is not very different from the con ditions which have led to the universal outbreak in Europe. Even our interna- tional financiers, who are accustomed to look at warlike conditions from the point of view of finance. do not hesitate to say that the bottom impulses which nave brought on state of war in Europe are undoubtedly economic and are based upon desire to secure large opportunities TOT feeding and otherwise supporting great populations.
 The American bankers have already be- gun a war, but it is peaceful war and contains no element which, at present at least, threatens the quiet of the United States.
 Just as the war began, our exporters were securing greatly increased markets for manufactured commodities. Austria and France have within the past six months purchased American commodities in which iron and steel enter in large amounts. France has made payment for one of the heaviest importations from the United States but the moratorium in Austria has held up not only orders which Austria contemplated placing in American markets but also payment for some of the commodities which have been ex. year. Russia is already in our market, having come since the war began seek ing certain line of American manufac- tured commodities.
 Markets Are Closed
 These markets. together with that of France, will probably be closed to us for time, although the expectation now is strong that we shall at an early Jay resume the exporttaion of food products to Great Britain.
 But in adapting present conditions tc the needs of commerce something that seemed like an economic war measure, although absolutely peaceful, has been under consideration by the bankers of New York. It is a method of providing for the financing of shipments of grain and other food products, but not yet of cotton. That will be accomplished through the placing of large amounts of money in trust probably in New York, or some of it may be placed in London Those who export grain or other food products will thereby secure payment upon these exportations. The responsible ity of all the details, including insurance and war risks, would necessarily be placed upon the bankers in New York or In Lon don who offer the facilities for financing these exports.
 Another Precedent
 Another precedent which is to be one of many that are to be established by this war is the placing in trust with J. P. Morgan & Co. by the French govern ment of a large amount of funds, a trans action which was instantly followed by negotiations for placing with J. P. Nor gan & Co.,. under the Guaranty Trust company of New York; through their London office, like amount of funds
 Credits of that kind would be unlike anything ever before established in the interest of exporting. It was expected that the exporters would be induced to send their products abroad because they would be able to cash here instruments drawn upon the funds established by the English government. or bankers behind whom stands the English government. i:. London.
 Every foreign exchange expert, and many of the leading bankers in this city were willing to admit that action of this kind would. for a time at least, enable New York to supercede London, which now for over century has been the great international clearing house city of the world.
 Another indication that the United States is preparing to enter upon. peace full struggle for command of consid- erable portion of the trade of the world is to be found In the various regions which have been held by representatives of the shipping houses and by the institutions which deal in foreign exchange Further more, the cooperation of the government in this undertaking was promised when the Secretary of the Treasury, MT. Me Adoo, invited representative business men, as we'll as representatives of the large banks to confer with him at the treasury department at Washington.
 MT. McAdoo recognized that the prob lem most immediately pressing in Europe is the one which will be answered when ways and means are decised for export ing grain. The problem Is of immediate importance because much of the wheat has been harvested and corn will for the most part be harvested within another month.
 The Cotton Situation
 Yet, after all, unless there be rellel furnished by the banks, the cotton situa- tion is likely to be the most embarrassing. Fortunately. cotton Is not harvested in any great amount. Therefore there will be reasonable time for perfecting arrange ments by which the cotton planters and the banks which have advanced their money can be protected.
 One feature of the cotton situation may prove to be of very great importance to the United States and for two reasons. In the first place, our exporters of cotton have in recent years furnished substantial ly the visible trade balance in favor of the United States. It Is possible that this source of national income may this year be greatly impaired. Cotton, how over must find market, and it is not improbable that large market may be found, in case prices are satisfactory, in the American cotton manufacturies. In view of the opening of the Panama canal to commerce and of the considerable de- mand of South America for cotton goods, the enlargement of the operations of the American cotton manufactories may prove that possibly the permanent result from this condition will be the capture by the United States of a considerable part of the foreign markets which heretofore Eng lish and French cotton goods have had to furnish.
 Panic of 1907
 In the panic of 1907, several highly im- portant and yet incidental embarrass- ments were of a sudden developed New York city would have practically been bankrupted temporarily at that time, since That situation was relieved when the late