The Washington herald., 1914-08-26
BANKER AGAINST
GOLD DOUTFLOW
Balance Of Trade in Our
Favor, with Foodstufs
Being Exported.
BOND BUSINESS SLACK
Stock Market Outlook Construes Ger.
man Victory as Unfavorable to Cen
eral Financial Condition.

The Treasury Department and New
York bankers are in frequent conference
relative to the resumption OF international
business.
The estimate of our debt to England.
running from t150OO0.0O0 to 250OO0, ,O00
complicates the situation.
majority OF the bankers say the situ-
alton is unusual in that England has
taken wheat shipments destined for chan
mel ports. together with confidential
mails and documents, and thereby held
up European gold which naturally would
go to London in settlement of American
exchanges American bankers also de-
clare that they have millions OF gold in
European centers, drafts on which ordi-
narily would be good in London, but
| which, Of course, are not now available.
| A bank official in discussing the sub
Ject yesterday said: We are not at all
influenced by the talk that our credit
will be ruined by our not at the present
| time making prompt payment in gold to
| London. Who is going to question our
credit? London and the whole world are
In state Of moratorium, or Of suspense
| Of payments. Should the United States
be the only one TO pay in gold when it
| cannot collect in gold in any quarter OF
the world outside OF China?
England is overflowing with Ameri-
can foodstuffs. Her warehouses and
|
imported and what she has taken from
| captured ships, and she wants more from
/ US as all countries do.
THE war and England's sweep OF the
seas has cut on some OF our resources OF
payment, but In a short time they will
| need our wheat and other food stuffs, and
with these we can settle our balances.
I'VE must do what every other nation
Is doing today. make gold payments slow
ly and securely.
There is a bank in New York that has
five millions of gold. or gold credit in
European cities. l think il will be all
| right in the end. Travellers credits have
been promptly cashed right up 10 date in
Germany. In fact, GERMANS seem to be
making special appeal to American inter
ests, but neither in Germany nor in
France will checks upon this banks own
deposits be honored with prompt and full
payment in gold. They are paying there
gradually and carefully. The banks Of
the United States must adopt the same
policy-pay gradually and carefully.
Every day presents its new problems in
finance and every day we are moving
steadily forward in financial readjust-
ment.
The field will be clear just as soon as
Europe takes our food products in settle
ment Of balances. To pay our gold too
quickly would put US at the mercy OF
Europe. Europe Would then dominate
not only the gold situation, but the prices
she would pay for American food sup
plies"
stock Markets status.
Members OF the London Stock Ex-
change are just like their New York |
brethren. They hate to see the curbstOne |
brokers doing a good business in listed |
securities while the exchanges are closed, |
so they are talking seriously OF opening |
part OF the exchange for cash trading. |
The London Stock Exchange appointed |
a committee last week TO look into the |
matter, but it has not yet made a report. |
II London starts New York will have TO |
follow, and II New York does not cheek /
short selling in this emergency 1t will see
some lively times. Even when real liqui-
dation was heaviest in the last week of /
July two-thirds of the selling was done
by the bears. The bears have made such
large profits that they believe they can
do what they please with the market.
Short selling makes the market tech
nically strong in normal times. but it
accentuates a panic. When quotations
bear little or no relation to intrinsic
value the risk OF the bear panic also
adds to the confusion. The bear panic |
in which Northern Pacific was bid up 10
l. 900 a share did almost as much harm 4
as IL the price had dropped to 81 a share
Instead. Wild breaks and bulges are to II
be guarded against in these days. and
that Is why the stock exchange closed
its DOORS III
II trading in stocks for cash on de-
livery or in the regular way is not re-
sumed on the floor of the two exchanges
that deal in securities, a very objection
able form Of bucket-shopping will be es-
tablished. II
Bond Business Slack.
Bond houses are doing little or no
business, largely because they have
agreed not to go out after it. Yet 1t is
possible that IL they should send their
statesmen out. under present conditions,
they would stir up no great amount Of
buying orders.
There are many people who believe out
standing fixed interest-bearing securities
must suffer In price because OF the in
creased competition for capital that is
likely to come with greatly increased
borrowing as a result OF the
war. AS listed bonds did not have much
of a chance to discount this possible
before the stock exchange
closed. and as the bond houses have
prices on their unlisted secU-
rites since, these people feel that by
they will be able to buy bonds
at lower levels.
Against this theory is that on which
borrowers are placing their faith-that
the war seems certain to slow up busi-
ness activity all over the world for some
little time at least, and that this relaxa-
ton In countries like the United States
will release a large amount OF funds for
investment and will insure cheap money
FOR the borrower. One view is that con-
iitions that make for tight money inva-
riably affect general business and re-
ease investment funds, and there fol-
ows q period nf easy money.
Whether this theory Of cheap money.
Ifter the first pinch is over, or that Of
till lower prices for bonds, because of
competition for capital will
'revail cannot be told at the present
ime. But both borrowers and lenders
re quite likely to suspend operations
or the time being to see what the out
ONE is to be. Country banks with idle
unds on hand are reported to be fol-
owing this plan.
Baltimore and Ohio July Report.
The Baltimore and Ohio Railroad Com
any's statement OF earnings and ex-
enses Exclusive of outside operations
or the month Of July. 1910, issued yes
erday, follows:
July 1915 lsia
'perating revenue. S,lSsss pRy 81
rII