The sun. [volume] (New York [N.Y.]) 1833-1916, 1914-08-31
FINANCIAL REVIEW
OF THE PAST WEEK
War Presents Entirely New
Financial Problems for
Solution Here.
GREATER TANGLE ABROAD
London, With Many Millions
Tied Up, Faces Complicated
Money Situation.
GREATER TANGLE ABROAD

ultimate erect OF tho war upon finance
and business in this country or elsewhere
The financial world is confronted with ar
entirely new set OF conditions which mus,
be met by extraordinary measures. Under
such circumstances, quite apart from the
uncertainties that lie in tho outcome o,
the great conflict itself. attempts TO fore-
cast the future arc impossible Comment
must. therefore be confined to tho nuInsr>
Gus problems arising day by day and viii
tho devts.ns OF means to solve thom -Four
weeks from tho outbreak Of war ind,
the financial world still oonoerned with
the task of repairing tho damage done u
tho machinery OF International oredits
Tho process of reimbursement u slow. bur
progress In being made and undue im
patience should not be felt
In tho light OF the innumarable smer,
sency measures that have bean suggested
II is evident that thers 10 stirl q erea,
deal OF confusion of thought a. to tn,
fundamental reason for tho continuanc,
of tho present deadlock. To understand
the real needs OF tho situation n must bs
realized that the outbreak OF hostilitie,
produced a complete breakdown of the
entire system OF international credits By
was conducted. The heart OF this syste
was the London n-oney market London
has acted as the clearing house for the
whole world and paralysis at that centre
eNtended Immediately to practically every
country on tho globe II Is obvious. there
fore. that no wide and permanent i'm
provement can occur In any direction
Many emergency suggestions for dealing
with me local situation are impracticable
because they fail 20 take this fact into
consideration.
London's situation IL irrrrcasurahly
moro complicated than our own. The In
debtedness OF this country 20 Europe
IL one OF many similar problems that il
delaying a return to approximately nor
nal conditions in the English money mar
ket Thus II Is estimated that Germany's
liabilities TO England alone amount 10
$500, 100000. These probably will re-
main unsettled until after the close Of the
war. Besides this. immense sums OF money
owing to London by the Continent OF Eu-
rope and by almost every other country
in the world are being held in a state
OF absolute rigidity by the moratoria-
1t IL the imposslbillty OF liquldatlng the
greater part OF this Indebtedness that
hampers the credit facilities of the Lon
don market. In turn II is the condition Of
the London market which has SO far
prevented any free export movement he
tween this country and tho United King
dom, The question Of free EXPORT
trade from tho United States would seem
therefore TO depend in part upon a pay
ment Of our immediate Indebtedness
abroad II. as Is believed. this would ma =
ter'ally relieve the credit situation in
London
The necessity Of big export OF food
stuffs from this country IN order TO
offset the heavy balance OF trade eeains.
US IL vital. Some idea OF the size Of
this debit balance may he obtained from,
reference 70 the Governments foreign
trade figures for the month OF July and
the calendar year These figures which
are not covered by the war period. show
that tho balance OF trade was working
steadily aRains this country. For the
first seven months OF the year the Excess.
or exports over imports was only SEQ
600 600. as compared with s3n7 non nnn
In the same time IN 1913 In the pre.an,
month. despite me heavy shipments Of
wheat, the showing mus. he infinitely
of the year there was steady o,ltpour-
ing Of American securities from Elirope
some OF which hsve not been paid for
Ordinarily our debts 70 Flrope ara on
set either nv sales OF securities or com
modries and merchandise. For som.
time 10 oome there m small likelihood
mat Europe will buy anything from us
eNc~pt foodstufrs
That Sheer n~cessfty must sooner or
later compel n resumption OF the EXPORT
trade 10 Europe In food sturs In plain.
Developments NO far favor the probability
mat the war win be long one Ey.rv
day makes tho food problem for Furope
more pressing and II is certain that
eventually foreigners must take huge
Quantities OF foodstufrs from this country
at enormously high prices. Tho sensa-
tional rise that has taken place In wheat
foreshadowB this. Speaking Of this rise
Broomhan's RepteSc, tho leading English
trade authority, points out that n tho wa,
lasts only twelve weeks longer Il will sc
interfere with agriculture In Europe that
next seasons crops will be seriously cur.
tailed. Such development, It Is pre-
dicted, can only spell famine in Europ,
in 1918 and prices for wheat in conse
quence that will make present quotation,
seem moderate and even low in com.
parison.
The violent rise in wheat last week or
top OF the previous extraordinary advnnc,
was partly due to the speculation on tn,
enormous possibilities opened up by IN,
war rather than 10 the size Of the existing
demand. Speculative activity I'm all com
modities Is broadening out in n surprising
way. This speculation in wheat option!
has been severely criticised in some quar-
ters as II II were solely responsible 70
the movement. But II cannot he denied
that the underlying reasons for hRl
| prices for wheat and other commodtie.
are likely 10 continue strong The farme,
| IS not averse to holding back his crop
and n general policy OF boarding food
| stuffs has helped the movement along
! Speculation In options may run riot for
| time but II will correct Itself and in tn
end tho average price will not he change.
| thereby.
As regards the condition OF the grail
| export market shipments continue in
! creasngly heavy. According TO Brad
| streets figures shipments of wheat las
week were 9,397 400 bushels, as com
| pared with $500 600 bushels I'm the pre-
| are mainly on account OF old contract
! and are covered by special credits Tx
! istng contracts with the United Kur
| dom, where most Of the wheat has bee
going moreover promise to he filled with
n few weeks time Meanwhile fresh busl
ness Is light and Is not likely to assum
| the proportions OF broad FREQ move
ment until the London bill market make
| methods of payment along the ordinar
channels "A possibility.