The citizen-Republican. (Scotland, Bon Homme County, S.D.) 1???-19??, 1914-12-24
INTERNATIONAL DEBT PROBLEM
), Only Be Settled BY Exchange of
"a Commodities.

+ba foreign exchange situation, in part
as follows:
..The question may be asked. how did
20 manage to pile up a debt TO England
'Mrtinated as 5000, 600, 600 or $3.50, 900, 600? The
newer is: Principally through imports.
through payment of freight and insurance,
~ dividends and interest on American Sc
.,rittes, by tic large sum spent in the
oggregate by travellers, and also by the
seHnTrrchase of American securities.
aIt Is hardly necessary to state that
,hose debts we're accumulated during the
.,onths preceding the war. In normal
times we pay off our debts By exporting
,be products Of OUT farms and factories,
rb,,s we had a balance in our favor. be-
tween imports and exports of merchan-
disc in
i iS of ,.... 800. 400. 600 1913 of...... $50, 500 00
iWi of. ..... SCI, 200, GOO
""@This year the difference between i'm
oorts and exports of merchandise has
tnrned very much against us, our balance
of exports over imports having fallen from
A21,0 O,V 0 for the first nine months of 1913
TO 57OQ0,C0O this year.
'oThe heaviest single item of export Is
represented by our cotton. During the
last five years cotton exports have
brought US in about $3.50, 600, coo, on an aver
age. annually. This year, owing to the
Interference to trade by the war. thew
have fallen off very heavily. Thus in
September, which is the first Shipping
month of the new crop. exports totaled
only $5,S06, I707. against $65, 744, 007 for the
same period of 1912. These figures cover
our total exports to all countries. The
heaviest Individual buyer is England. who
has taken during the last five years an
average of nearly $500, 600 bales, or O. per
cent Of our total production. In this SEN
tember we shipped her only 81, 0O. coo
worth, against $26, 500, o00 in September
1918.
'7It will readily be seen from this how
seriously our balance of trade is suffer-
Ing from this one item. AS a partial Off
set we have shipped a great deal more
wheat, but Notwithstanding this, the bal
ances we are owing Great Britain are con-
siderable.
There Is not the slightest intention on
the part of our business men to repudiate
their debts: at the same time the view Is
taken in some quarters that as their diff
~fculties arise from the war, and the war
is not of their doing, due consideration
should be taken of their position. The
negotiations with Sir George Paish are
methods of increasing our exports to
Great Britain. The latest proposal is that
British spinners should take a consider
able amount of this years cotton at prices
which would be mutuaIly satisfactory.
Thus far, nothing definite has been con-
ciluded, aIthough 1t is not at all beyond
the range OF probabilities that something
along those lines may be arranged.
1T seems that when Sir George came
over here, he could not understand that
with $1,000, 600, 900 in gold in our treasury,
stuck ct settling our debts, which, as has
been stated before, are estimated at
S2GG, Goo, 600 or $3.50, ooQ; 900. He was eyi-
$1,000, 600, 900 in gold in the treasury is
not free gold, but simply remains there
IN great part as cover for gold certificates
issued IN It's stead, AS a nation we do not
IKE to carry gold in Gun pockets; q small
piece OF paper, called a gold certificate,
ferred.
THE $500, 600, 900 gold, rcpresenting the
reserves Of our banks, could not be re-
leased without causing serious financial
disturbance. On our gold reserves are
built up the oans made By banks in the
proportion of four to ones that is. for
every one dollar gold the banks are al
loved under the present act to loan 81.
Under the new federal reserve act, which
Is now scheduled to go into effect the mid
ole OF November, only Is per cent in gold
reserves is required by the banks in CEN
s sfal reserve H center;s. To that extent we
De pest that We keep the liberated gold
WITHIN our borders, as we nav issued
some 1855, 900, 600 of emergency currency
since the war began, and while there is
no question as to the s~oundness of that
currency, still, gold as a basis for money
Is generally recognized as the highest
Great Britain, IN the other hand, has
peen able to increase her gold holdings
sIhce the war began by over $160, 900, 600.
This she has been able to accumulate in
great measure through the shipments we
made her in the days just prior to the
outbreak Of hostilities; by shipments of
land at Ottawa, and by the gold mined in
South Africa and Australia, for the time
oelng left with depositaries in those coun-
Cles. Owing also to this increase in her
quarters that it would be only a matter Of
fairness for our English creditors to hold
on until we can settle through shipments
OF merchandise the debts we have here
tofore contracted.
There is every indication that a salts
tative is showing every desire to view the
from our standpoint and to
help an equitable adjustment. In this
particular instance the British govern
authority, as it is due in good part to its
" action in declaring a moratorium
mat much of the unsettlement in our
trade with Great Britain has arisen.
Norway, it might be pointed out, was
until recently in much the same position
as we are in now, because she also found
merchandise. coupons etc. She, how
ever, was able to liquidate her debt to
Gfeat Britain through an issue of short
term treasury bills. Some such method
of settling our debt with Great Britain
mas been suggested, but so far it has
been considered impractical.
For a definite reason, England finds It
easier to meet the many financial prob
arising out of the war than we,
because she is lending, while we are a
borrowing nation. Moreover, she has Il
banking system which is under the con
troll of one central institution-the Bank
OF England--while the acts under which
we ore still operating are the reverse.
SO fur as full Capitalization of power is
concerned.
re was figured a few years ago that
the British banks kept reserves of only
about 6 per cent of their demand liabili-
ties, against the 25 per cent which our
6anlss at central reserve %centers must
nave. This small ratio of reserves in
England has sufficed, because of the high
credit Sf the Bank of England. and be-
CAUSE of the power that institution has in
the export and import of gold
through it's hold or the money markets.
while our money system under the new
FEDERAL reserve act may not be able to
Weld quite so much power, it should
nevertheless be a great Improvement on
our present system"
Pennsvlvania's Coal Tax.
From tho CprtnpfiaII fAJascO R~eDublican.