The Birmingham age-herald., 1914-09-05

many or those who have invested in American securities find themselves now pressed for money or deem pres sure of that kind inevitable in a short time As the United States is the greatest and, until a month ago, the only free market for gold so in case our exchanges are open 1t will be prac- tically the only free market for trans actions in American securities
 If there could be anything like a req sonable estimate of the amount of American securities which would be thrown upon the market in case the exchanges were open, then it might be easier to work out methods which would tend to bring foreign exchange quotations down to positively normal figures.
 Holding the Gold
 Occasionally the suggestion is made. and it undoubtedly will be- brought to the attention of the federal reserve board-that the American banks yield enough of their gold to pay immediate obligations, permitting even hundred millions to be lodged with the agency of the Bank of England recently estab- i1shed at Ottawa The argument in support of this is based upon the be- lief that if this gold should thus be furnished 1t would serve to break the impasse of the foreign exchange situa- tion.
 But those who oppose this plan say that the difficulty lies in the fact that it is impra cticable, even impossible, to say that no more than hundred mill lions of gold, possibly one hundred and thirty, would be needed. The federal reserve board will probably at the con- ference now under way learn approxi- mately that the Anlerican obi ga tions to Great Britain and the continent of
 
 American securities. but by trade, com mercial and banking transactions. Hay ing gained this information. the next question that will arise is this: How much of this obligation will the United States be called upon to absorb in case our securities markets are speedily opened? Of course it is not reasonable to presume that even one-half of the three billion dollars represented by American securities at par can be ab- sorbed immediately by the United States, although in 1899 the United States did absorb within few months about one billion of American securi- ties and in addition to that phenomenal transaction was able to import about one hundred millions of gold
 The Paish Estimate
 The president of one of the largest of the New York banks said this morn ing that he thought it not unlikely that the federal reserve board would at the conference find Sir George Paish's estf- mate of American indebtedness sub stantially accurate. But this would be done by accepting an aggregate of something like three billions of Ameri- can securities now invested abroad. which. in the real sense of the term, would not constitute an immediate debt unless these securities should all be sold within a short time, a transaction which Is impracticable. Second, the federal reserve board is likely to find that the average of the estimates made by those who are now in conference with the board are other obligations based upon ~Ade, Commerce, insurance, freight and banking transactions and may aggregate between two billions and three billions more.
 But, after all. the first thing to be done in order to clear the path in which now lie the obstacles in the way of return to reasonable foreign ex- change quotations is to find out, if pos sible, how much we now owe Great Britain and the continent of Europe in the form of a debt which is immedi- ately payable and how many of the American securities which are held as investments abroad are likely to be thrown upon the market, which at this time is exclusively the market of the United States, or would be if the ex- changes were opened. No one doubts that a way will be found by which the immediate obligations which were cre- ated when American securities were sold in London markets for. account in the United States just before the dec- laration of war will be met.