The sun. [volume] (New York [N.Y.]) 1833-1916, 1914-09-06

, pIo'e'u lO discharge It's foreign in
deOtedness. according to it's unques.
tionc1 ability to pay.
Accordingly 1t must be n matter OF
patriotic satisfaction To note the under
taking which has been entered into by
the bankers Of New York under the
leadership of the Morgan house to pay
the foreign obligations of New Yorl;
city which, In round numbers aggre.
eating about 10000. 900. ma ure abroad
in the next few months. Words of
praise can he properly bestowed on the
New York bankers for the swlftneSs
and judgment with which they have
acted tn avail OF the opportunity now
offered To demonstrate in signal and
emphatic manner the fact that there
Is no moratorium In the United States
against the country's foreign debts.
Nothing could better advertise TO the
world both American solvcncy and
American disposition to honor fnan.
cinl obligations than the negotiations
which have been completed for the
cancellation Of the notes of this city
as they fan due in Europe.
We do not mean to say that the
process Of paying debts will not involve
some strain SO terrific has been the
dislocation Of all commercial and finnn-
cial relations that tax Is going To he
| imposed on American resources To meet
debts foreign and domestic as the time
nf I,,t .
precedent fails, the country has started
In the right way 10 protect itself
against the contingency Of finally con.
Tossing at least temporary bank
ruptcy by declared moratorium. The
greatest factor in credit operations is
confidence. and confidence will be com.
munlcated abroad and strengthened at
home by the exhibition in the New
York city loan transaction of this
country's honorable and scrupulous re.
gard, manifested at n considerable cost
for its financial liabilities incurred
through no fault of It's own, hut through
the sudden plunge Of Europe into the
maddest war In history.
Reviving confidence must condnce TO
freer play OF International and do
nestle credit, which will not only ia
cilltate the further liquidation Of debts
but lessen its expense, although il will
still be heavy. and AT the same time
help Ia bring about a more normal in
tcrchange of goods IN the home and
foreign markets. The details of the
New York city loan agreement are not
to the point OF the present considera-
ton, but experience Is warrant for the
belief that the fact OF the agreement
itself will obviatr the necessity of pay
ing the city's whole foreign debt by
gold exports. The very announcement
of the plan 10 pay the whole amount In |
gold II need he will tend to promote |
the creation of foreign exchange. that |
Is Of international credit instruments. |
by which considerable portion Of the |
city's debt can be discharged.
The consequences of this ono trans
action may he more far reaching In |
their advantages for the United States .
and for the rest Of civilization than f.
can he coniectured at the moment. No
country wants gold in the last ANALYSIS
for any other than the most effective
banking and currency service which II
can be made To render. The metal
can neither he eaten nor drunk. In
times of Wild excitement II Is insancly
boarded, but once mer Surcs have been
Instituted 10 guard against boarding
1t the impulse 10 hide it away is Inn
weakened. The most iutelll-
gent use which can be made Of gold Is
to employ 1t as bank note, bank deposit
and clearing house reserves 10 protect
the soundness Of credit and Of credit
Instruments and assure the settlement
Of balances after credits and debts
have been Offset.
This precisely is the use which CAM
again be made Of gold now that the
essential readjustments after the first
violent arrangement of all financial
md commercial adjustments in the out
Freak OF the European war have been
THE Sun Is sure that the {
whole American banking community {
Will be ready to follow and back up the
taken by the New York .
'ankers 10 help bring about the revival !
# Those customary credit activities in I
he foreign and domestic money mar.
iet through which alone 1t will he pos. I
ible TO mitigate the economic adverse 7
les OF the war by sustaining CONNER I
ial and Industrial enterprise. Tho 1
spirit displayed at the banking a
conference with the Federal Re- 4
ervo Board mt Washington on Friday
= proof that the gold resources Of A
he United States will hcnceforth be y
eyoted most cffectunly to the pres I
rvatlon of the cOuntry'S welfare and f
he welfare of all countries which n
lust perf0iCe look to the United states II
pr assistance ~ this time, n
There has never been any defence +
eainSt the charge that In the past n
here has been n stock Of gold in the II
'nited States far greater than was
eeded for banking and currency ser. :
ipp Splput flpDllV monuupI IN tba