The Washington herald., 1915-01-15
Our Growing Importance In Finance.


was foreshadowed some time since becomes abso-
lutely ndisputable, and that is that at the pres
ent level of prices fears of a food of European
liquidation of our securities almost ground
less Somehow, people in this country have been
generally inclined to forget that there is a vast
difference between the possibility of selling of
our stocks and other securities by European bank
ers, and similar selling by private investors of
Europe whose holdings of our stocks and bonds
are of course, much larger than those of bankers.
The attitude of bankers in international finance
is often determined by world problems and by
other influences which rarely appeal TO private
individuals. banker in London who holds, for
instance, maturing short-term notes of the city
of New York of the value of 100000, may choose
to demand payment of the notes in cash when
the date Of maturity arrives rather than to re-
invest the money in the United States, because
at the time financial emergencies in Europe may
be such that he desires to enlarge his supply of
ready cash.
But these emergencies do not so much concern
the private investor in England who owns 100
shares of our Lake Shore Railroad stock. He is
chiefly Sntercsted in the security OF this stock
and the chances of any impairment of its divi-
dends. As long these considerations remain
strong and If the investor is not himself pressed
his Lake Shore stock. The Overwhelming chances
are, therefore, that European selling of our Sc
curities in future will depend more upon the state
OF business in the u tied States ITSELF than upon
any influences orig; Iating in Europe. If business
improves here o. is even no worse than it is at
present, there may be little unloading" OF our
stocks and bonds by European holders. Indeed,
there is bare possibility of a renewal on small
scale of purchases of these stocks and bonds for
European account because the United States is
the only great country at present that is not in
volved or in danger of being involved in the Eu
ropean
There is another and larger matter that is
looming up on the financial horizon of the United
States. An incalculable increase in the financial
power of the United States is growing out OF the
fact that country is practically the only
great country in the world that is on absolutely
firm and unqualified gold basis. All the other coun-
tries are paying out paper money instead OF gold,
although some of them are still pretending to
maintain gold payments France has never been
on a strict gold basis, but is bimetallic country,
paying its debts in gold silver it chooses.
At the moment it is not paying its debts even
in silver In Germany there is a premium on
gold, and the government has made it a penal
offense to send gold out of the country England
mas no gold for export, and the merchant who
asks for any considerable quantity of gold from
he Bank of England becomes marked in
he financial world. France, England, and even
Canada, are buying each others national securi-
les, but they are not seqding any gold to out
side countries. The nations comprised in the
group of allies seem to stand in pretty much the
same position that the United States occupied
after the panic OF 1907. sort of clearing house
las been established between them, where the
great national banks accept checks drawn each
other and payments made through the clear
ng house" just as they were made here in our
own time of trouble seven years ago. But real
money does not pass
The result is, first. that outside nations who
want to borrow money and want the proceeds in
omc form that is actually available to them, have
o come to the United States for ii. The Argen-
inc loan of SI5,oooooo that subscribed for
lcrc in one day is the latest instance in point.
It is naturally the rext step from this for a good
oart of the banking and trade Of Argentine and
other similar countries to be diverted to the
-'nited States a. the one nation that has gold to
pare and can accommodate its business Gus
omers The gold strength OF our country is
uch that during the last two years have
hippcd abroad more than $500 of the yell
ow metal and have almost as much gold now as
vc had when the shipments began. 1t is an un-
matched record Taken in conjunction with the |
Inauguration of our new Federal reserve system, |
portcnds great things for the United States.