The Washington herald., 1914-08-16
U. 5. IS FINANCIAL
ALLY OF Powers
Non-entanglement Policy No
Bar to Profitable Gold
Alliances Abroad.
BIG ADVANTAGE GAINED
Metal Is at Premium. Good Securities
Are Bought at Low Prices. and
Trade Opportunities Beckon.

More than a century ago George Wash
ington outlined the cardinal feature Of
American foreign policy to be: No en-
tangling alliances with European ma
tons" Through the intervening years
this policy. with minor fluctuations
through shifts of administration. has
been adhered 10. 1t remains today the
bulwark which guarantees the United
States q development, industrislly and
politically. independent Of foreign infu-
ence.
However. many an invisible alliance"
has sprung up. The United States today
is heavily interested in Europe. and to an
even greater degree Europe is interested
in America. The mutually OF interest
largely Is a financial one, and II is the
main reason why the general military
confagration in Europe is OF such su-
preme importance to the United States.
BiEE-st Gold Producer.
The United states is the worlds heavi-
est producer and holder Of gold. Gold is
necessary to conduct wars and TO win
battles, as every general in the field
knows Therefore. at the first threat Of
a great war Europe demands gold from
America at any price. Various methods
are taken to get II. Gold at a high. pos
sibly record breaking price. has been
flowing from New York to London and
Berlin recently. draining Wall street Of
its normal reserves.
The European bourses have been dump
ing American securities on the market
at such prices as 10 make thier purchase
by Wall street imperative. and the Sc
curities must be paid for in gold. 1t is
recognized, Of course, that the depres-
sion in American securities does not rep
resent any decline in intrinsic value. but
merely the anxiety Of Europe to liquidate
and transfer all her available assets into
gold.
The first influence Of this action on the
United States was depressing; but the
ultimate effect will be far different. For
one thing. practically all the securities
thus sold by Europe are bought in the
United States. They are bought. too. at
a phenomenalIy low price. and at tremen-
dous loss to the European holder. The
stimulation thus given to the American
investment market will be beyond meas
urement. II means the transfer Of more
than t50.OOOOO0. and possibly Hoo,oOo.ooo
from European to American hands. pur-
chased at a price far below actual value.
and this in itself means a mighty quick
ening OF American capital.
For more than forty years Europe has
been taking advantage Of American
financial furries due TO a clumsy cur
rency system. Now II Is the United
States opportunity to turn the tables
and the loss to Europe will be heavy.
There have been no more highly prized
investments on the European bourses
than American bonds and stocks OF the
legitimate type. and in average times
nothing could induce the foreign investor
to part with them.
Capital CurtaIIed.
Through the liquidation. the money
market in the United States will be con-
tracted and there will not be the ordinary
amount of capital available for new In
dustries. Secretary Of the Treasury Nc
Adoo declares, however. that this coun-
try has nothing to fear from the tenn
porary drainage Of gold. Despite the fact
that more than 5000 ,0o00o0 in gold has
been exported since January, he sees
nothing in the financial skies to cause
anxiety. The new currency act. when
finally put into operation, will make the
gold dollar in the United States do the
work OF two under the old bond-secured
currency system, and win ease up what
ever contraction may be caused by the
war.
The conflict will not only cause Amer
lean exports-especially foodstuns, to
reach high-water mark, but the price
paid for them will insure huge profits to
the American farmer and manufacturer
Our foreign trade will be given a mighty
stimulus. Much Of the gold that goes out
in payment for American securities re-
purchased will be sent back across the
Atlantic in payment for our wheat and
other exports the coming fall The wheat
market has already shown the quicken
ing effect Of war. with the prospect that
the Russian and the Austrian harvesterA.