TaÌˆgliches Cincinnatier volksblatt. [volume] (Cincinnati [Ohio]) 1885-1919, 1914-12-03

therein he will boast only partly Of good
banking practice, and, for the rest, o
good fortune. No matter how solvent
a banker is, he cannot pay money OF
demand IL q very considerable number
Of his depositors happen to make theii
demands all at once.
This country is heavily indebted te
Great Britain, and always has been
Like the banker, it undertakes to pay
gold on demand. If in the exchange OF
goods the account is not evened oil
currently, it Undertakes to make good
the difference in money, If, on the
maturity OF bond issue owned In
England, the English demand for goods
is not sufficient to satisfy the debt
then we undertake to pay the debt In
gold. But the undertaking Of experience
is that goods will settle 90 or 30 per
cent. OF the account, leaving very
small difference ever to be settled in
gold. There is no better understanding
than that of experience. 1t Is all a
banker has to go by. 1t is the basis oi
international trade.
Moreover, there is lot of nonsense
about the quality OF the creditor nat.
ions relations with a debtor nation
The debtor nation is its customer
When the United States borsows capital
in Europe il does not borrow gold or
money. II has no use for either. II
wants goods, such as raw materials
tools, and the means OF further produc.
ton So, when one nation lends capital
to another, the lending nation acquires
customer and creates market for it,
own goods. The production and sale
of those goods BY the creditor to the
debtor nation is part OF the creditor
nations prosperity. The debtor nation
is as necessary 70 the creditor nation as
the creditor nation is to the debtor
And the understanding is that both the
interest and principal shall be paid back
by the debtor nation largely, indeed, al
most wholly, in goods.
1t would be preposterous to think oi
ever requiring the debtor nation sudden.
lly to convert its factories and tools and
stocks of raw material into money and
return the same forthwith to the Credi
tor nation, which, in the first place, did
not lend money or gold, but goods, and
should therefore, on making such de
( mand, be in the position Of requiring
something to be returned not only Out
Of season, but out Of kind. 1t would
be as absurd as Tor merchant, OF
borrowing million dollars OF credit al
his bank, to go forthwith to that banl
and demand a million one-dollar bills
load them upon truck outside anc
cart them away. He obtained the ere
dit in the first place on the understand
ing that he should draw checks against
liz.
All the arrangements OF finance anC
commerce are very simple in their es
sence, as you will be able to see II 70,
will cast out the fact OF money entirely
and consider merely that wealth is Dor
rowed and loaned and exchanged in th'
form of goods, as is practically Away
the case. Their complexities are tech
nical merely. Years of experience hav'
gone into them; they have perfecte,
themselves automatically by the growtl
OF experience Now suddenly is chaos
unexpected and unprepared for, owinI
to the outbreak OF war in Europe. No
thing holds as before. Trade is para
lyzed. Credit between belligerent ma
tions is swept away between two days
and nothing answers but gold. Fancy
then, the unreasonableness OF one of tn
belligerent countries going to neutra
country which happens to be its debto
and with which it has maintained I
large trade, saying;
"Pay up your debt in gold, please"
The debtor country might say: "Bu
we have never paid in gold that way. ]
wasn't expected. Our trade is stopped
and temporarily We cannot pay i
goods ss fast as we should like; bu
surely you cannot ask us at such tim
TO do q thing which was never con
templated in our arrangements an
which it would be almost impossible 10
us TO do in time Of peace"
And fancy the creditor nation IN
sisting: ave must have the gold. Yol
have il to pay US with. We can coun
It in your banks'.
The debtor nation might say: "Bn
we have banking system that require
that gold as legal reserve. We have tn
goods. You will need them. You vii
need perhaps more than ever, becaus
you are at war. Go on taking tn
goods as before and our account will b
settled"
Fancy the creditor nation saying b
that; Perhaps we shall need the goods
You can look forward to that. But w
want tha 1old now Think how prou,