The Birmingham age-herald., 1914-11-04

many is about te establish q large credit in New York. The reasons for believing this are at present infsren- tial. For a time exchange on Berlin was heavily depreciated and there was little or no demand for it. Occasional ly the question was asked whether this did not indicate that the financial pow CTS of the world exclusive of Germany were beginning to believe that the lat ter would be defeated in the war and that in addition to her losses at home she would be compelled to pay heavy indemnity to Russia, Belgium. France and possibly England
 That inference. however seems to have had no Justification, for within Il few days there has been a market for exchange from Berlin. This would seem to show that Germany has begun to buy American commodities in large amounts. but whether contraband of war or not is not yet disclosed. Bx- change upon Berlin is now finding a market because there will be use for 1t in payment for American commodities bought by Germany or her citizens.
 Germany Can Get It
 There appears to be no doubt that Germany can obtain whatever credit may be essential from American bankers. al- though very likely from private banking houses which have in the past carried on large financial relations with that country
 Japan borrowed heavily in the United States at the time of her war with Rus sia and the administration at Washing ton did not look upon transaction Of that kind as a violation of our neutrality. nor was it so regarded by Russia or by any neutral nation. Much the larger part of the money obtained upon Japanese bonds taken by the United States re- mained in this country, chiefly New York, some in Boston. some in Chicago. Japan drew against this fund for the payment of American commodities which sh 3 bought while the war lasted, and also after the close of the war, for our own products aided Japan in rebuilding her industries.
 It Is exactly this which France Russia and the other nations, beligerent or neu- tral, which are now establishing credit in the United States or. in plain English, securing loans here purposed doing with the funds or credit thus obtained. They will buy American commodities and when these commodities are delivered, free on board, they will draw drafts against these credits. In that way tho money does not go out Of the country. In all probability had 1t been intimated to l. r. Morgan & Co. that the administration at Washington would neither approve or disapprose the proposition made by France involving a loan of s1o0, 100000. that loan would have been made and much the greater part of 1t would have remained in the United States to be drawn against by France when making payments for purchases of American com- modities.
 It Is a Loan
 There has been some disposition to | claim that fba credit piVqn Franco by the National City bank aggregatins f10 100000 Is not a national loan. But 1t is a loan in effect, If not in name. The resources and credit of the French government which are made visible and negotiable by means of French treasury notes having short life and bearing interest at the rate of 6 per cent are the basis of security for this loan. Neutrality might be violated if American bankers should discriminate against any of the belligerent nations, provided the terms named by enc were similar to the terms named by the other.
 For instance, if American bankers were to reject peremptorialy any proposition that came from Germany with a view oi esta blishing credit here, while at the same time accepting a proposition thai came from the French government that would demand an unfriendly act moi worthy of neutral people But there are SoOu reasons TOT Surmlslng that Ger many will establish a credit here, if she has not already done so, and that it will be utilized for payment of commodities bought hee- on account of Germany ol he1 citizens.
 It is peculiar situation, and none which has arisen illustrates in 8 betteI way the characteristics, unprecedented as they are, of the present internationa | financial and trade situation. New York city is sending gold to Ottawa and, il | fact. sent some on the day when tht National City bank agreed. to finance s 1 French loan of $10,000 900. The gold thai was sent to Ottawa is to be utilized fir payment of the obligations of New York city in England which are now due But, on the other hand, England's pur- chases fin the United States, where she must have established funds or credit are estimated as aggregating since the first of September s3o,000,00o. These pur- chases of similar character continue and are likely to continue for months The unprecedented total in the money value Of exports from New York harbor in four days Of the last week of October sl6,000,000. tells a story of exports which are bound to offset and more than off. set, in a short time, the aggregate of cur indebtedness on current account tc Great Britain.
 Some years ago there was exported from New York in gold approximately E, ,00o,000 At the same time practically a like amount of gold was on the way f, om England to the United States, and the steamers which carried this gold naS4p6 one another fIpOp fha pnaon val