South Bend news-times. (South Bend, Ind.) 1913-1938, 1914-10-21
AME RICAN MONEY
MUST STAY HOME
Bankers Should Refuse to
Handle Any Foreign Loans,
Says Frederick Strauss of
New York City.

" fAoLlAANG1 I'm OCl. L. AUltIl-
can money must stay at home" urged
Frederick Strauss, New York banker
OF j. Seligman and company, repre-
senting the Investment Bankers as
sOclauOn OF America, in testifying to-
day before the interstate commerce
| commission IN the hearing on advance
In freight rates in the east.
Inc amount of money which the
I belligerent powers of Europe Will
need after the present war will be so
vast as TO absorb all their purchas-
| ing power" Mr.. Strauss went on. IF
/ the bankers OF America act wisely
they VIII refuse 10 handle any for
elgn loans because we shall need all
the capital we can get here. our
capital at home must be available for
American industries"
Mr.. Strauss appeared before the
commission to urge that something be
doEe TO alleviate the financial pro-
blems of the eastern railroads asking
for increases in freight rates.
The European war is a new factor
of tremendous Importance inf the rail-
road situation said Mr.. Strauss in
explaining how the colossal struggle
in Europe had affected the price of
railroad securities.
Advance Would Help.
I do not claim that the mere
granting of an advanced rate to rail-
roads will adjust the whole European
confidence in the securities. If Eu-
ropean investors become afraid the
whole outcome Will be disastrous"
Prediction of a gold famine unless
confidence In American railroads Sc
curities abroad is restored came as a
starting statement from Mr. Strauss
The United states Will face a gold
famine if ii is forced TO take up all
its European obligations" predicted
the banker.
How much gold is to be exported
from this country depends on the Eu-
rOpean investor" continued Mr.
Strauss. When the stock exchange
| opens, a large amount of railroad Sc
curitieS held abroad will surely be Of
| tered for sale, because their owners
will require money. If these inevi-
table sales are to be added sales which
VIII take place because Of lack of
faith in American securities an un-
fortunate condition will prevail
Europeans VIII Sell.
European holders will sell because
of lack of confidence and American
| investors for the same reason will be
loath to buy except at extremely low
prices.
IF of the four or five thousand
millions Of American securities said
70 be held abroad. only a moderate
amount - say 10 or Is per cent
should he sold here the result would
/ be appalling because of the increase
IN the export of gold that would
necessarily follow.
National banks of the country
held approximately $625,OOO,OOO of
gold. There is more gold than that
in the country. of course. not
only in the state banks and trust
companies, where it is within control
but also liz the pockets of the people
where IL is not within control"
Mr.. Strauss insisted that if the fed
eral reserve banking system were i'm
full working order the conditions
might appear brighter because the
gold would then be concentrated in
, banks vaults, whereas now ii circu-
lates widely among the people where
IL Is of no economic use and where
paper money takes its place
The cotton situation is also dam
aging, explained Mr.. Strauss. The
blockade in the usual movement of
cotton TO Europe in addition to cut
ting down the earnings of the south
ern railways is affecting adversely
our foreign trade balance and furth-
er aggravating the foreign exchange
situation"
Effect Not Vet Felt.
The effect of the cotton situation
upon gOld~eXpOrtS has not vet been
felt. according to Mr. Strauss
bankers OF the country are work
ing to minimize further gold exports"
declared the banker, "and if their eff
forts should fail by reasons of a
deluge of foreign selling it is quite
conceivable that this country might
have To suspend gold payments.
Mr.. Strauss showed that since the
war started. exports from this coun-
try have fallen off Therefore. the
situation has become aggravated" he
said, land il is my opinion that the
amount OF business we are going TO
do with foreign nations is going to
be dependant upon whether we can
extend our credit. We shall not be
able to finance these nations. Those
who look for large exports after the
war is over are wrong"
Commissioner Meyer tried to show
that any lack Of confidence the Amer
lean people feel towards the railroads
is due largely TO the railroads meth
DDS in the past.
Bankers Are Scored
Bankers who sat still and let the
credit of the railroads be impaired
because of frenzied financial meth
DDS were severely scored by Mr.
Brandeis who characterized the rail
roads application for an increase in