The sun. [volume] (New York [N.Y.]) 1833-1916, 1914-10-26
American Debtors and British
Creditors.


over the extent Of our foreign obllga-
tons on what Is called current account,
good deal of progress has been made
In Canceling them, and the aspects Of
the foreign exchange market suggest
that in a rather normal fashion the
bills which our bankers and business
men have to meet In London will be
duly settled.
Leaving out Of present consideration
the matter OF European holdings of
American securities. from which liqui'
dalton is to be expected and against
which provision will have to be made,
there seems to be no reason for regard
Ing the international financial situation
affecting us with grave apprehension.
Our trade importations are tending TO-
ward large reduction from customary
volumes. The remlttnnces which we
customarly make to Europe for travel
lers expenses and on other accounts
will be heavily curtailed.
Meanwhile our commodities and man
ufactures are already being bought here
on an expanding scale by belllgerent
and neutral countries alike because
there is no such source OF supply for
them anywhere in the world to-day as
that which is furnished In the United
states We are apparently going 10
build up an unprecedented international
credit balance within year which will
incidentally 20 far toward taking care
of large return of American securi-
ties from Europe.
As n result OF the conferences which
Sir GEORGE PAIsH and Mr.. BASIL B.
BLAcKETT, representing the British
Treasury. have been conducting at
Washington and which are presumably
10 be continued elsewhere before the
special financial embassy from Great
Britain has concluded its mission. the
adjustment Of our remaining indebted
ness abroad may be facilitated. At tho
same time provision may be made for
assisting future processes OF offsetting
debts and credits, however complicated
they may become through European
liquidation Of American securities II
will be to British advantage as well a.
ours TO contrive arrangements that will
enable the foreign exchange market to
finance international transactions Of
every sort in the customary ways which
avoid the use of much gold.
There would indeed be a very ex-
cellent chance that the conferences of
/ Sir GEORGE PAIsH and Mr.. BLAcKETT
would fail of any practically beneficial
result unless they contemplated meas.
ures To minimize the drain on our gold
supply. The country's gold exports In
1914 TO date aggregate more than $780,
100000. In addition to that, provision
was made in the New York city loan
underwriting and through the forma-
tion of the foreign exchange gold fund
for the shipment of fully Sl50OO0,0O
more.
In its employment Of gold for the
settlement of international obligations
the American banking and business
community has given every evidence OF
its desire and ability to pay Its foreign
debts that can be reasonably required
There is no other country that could
or would have given up so much gold
has parted with in the last few months
or agreed to export If necessary.
Obviously there Is limit even to the
ability of the wealthy United States &c
lose the reserve basis OF credit and the
means of settling debit balances. The
4 III. - Ill
banking system will, II expectations are
realized, permit gold to be more effec
lively employed in business channels
than ever before, but the new banking
system is yet to be established. It's In
auguratIOn viii involve some disloca
ton of funds, and in any event banking
will continue to be done under statu
tory reserve restrictions.
Foreigners have often marvelled a
; the large stock of gold In our currency
system, a larger store OF gold, indeed
than any other nation has ever had
but 1t is all employed. 1t can and viii
be more economically used In time a.
we improve our banking and currenc,
!
material amount for export now mean
, Its withdrawal from present service.
Indications are dlscernible that for
eign exchange may in no great length
Of time drop so far that the Britisl
, pound sterling instead Of being quoted
, at an extraordinary premium here, vii
he quoted ut n corresponding discount
, such II reversal Of the internationa
, exchanges would normally be folowe,
=. by heavy American imporrations o
a gold. Presumably this possibility ha
, affected the British financial reckonin
and helps to explain why our banker
a feel no assurance that when the ex
n changes turn In our favor gold wi
. come back to us.
T. Even though British finance Is sti
! maintaining Itself on gold basis. tn
Il circumstances OF the war IN whic
q Great Britain is engaged involve yer
Il uncertain factors. Were assurance