The Chickasha daily express. (Chickasha, Indian Territory [Okla.]) 1899-current, 1915-06-30
ARE WE ON THE EVE OF A WAR
BOOM?

American exports to Europe, at the
present rate of increase. will, by tht
end of 1915, probably exceed our i'm
ports by approximately sl.5o0. 900 900
Payment of these exports will have tc
be made in one of three ways, accord
ing to Theodore H. Price, in the july
number of Worlds Work.
1. In American securities held
abroad, the available supply of which
seems to be nearly exhausted or,
2. In European securities or prom
ses to pay. which, as shown by re-
cline in the French loan recently plac-
ed here, do not seem to be acceptable
here. or
z. In gold
The abnormally low rates of Euro
pean exchange indicate that the main.
tenance of specie payment in Europe
has practically been abandoned.
This means initiation" says Mr..
Price. 1T means that the internal
commerce of the countries at war VIII
shortly be conducted in a credit cur
rency." Gresham's law will then oper-
ate. which in this case means that
gold will speedily disappear and be
replaced by the less valuable paper
money.
"The United States will still. how
ever, be In position to demand pay
ment in gold for what 1t may sell, and
the result will be that large por-
ton of the gold now In Europe viii be
sent here to pay debts
A statement of the principal banks
of Europe shows that the total stock
OF gold on hand in May, 1915, was
s3.S69. $4,000. Assuming that $780,
100000 or s300.OOO0 900 of this vii,
come to America to pay for American
exports, Mr. Price points out the fol
lowing interesting result:
This gold will ultimately find its
way into American banks. Now un.
der the federal reserve law the surplus
reserve which the banks are required
to MAINTAIN is Is per cent of their de-
posits. Mr. Frank A. Vanderlip, pres
ident of the National City bank, is au-
thority for the statement that the pres
ent surplus reserve Of national banks
in this country is s736, 900, which
would permit Of loans to a total of
$4,000 100000. The surplus reserves
of all other banks other than the ma.
tional banks would permit of an equal
credit expansion. And statement OF
the banking institutions in the United
States shows that they have sufficient
resources to make these loans. With
the addition of the gold from Europe
--about s2Oo,00O.OO0 or $500, 900, 600
to their surplus reserve, it would be
possible for American banks to lend
he gigantic sum of seven or eight
billion dollars.
An old. fundamental theory of eco
iomics says that an extensive use of
'redit tends to depreciate gold and to
decrease the purchasing power Of
money That means that money will
'uy less than under normal conditions
in other words, higher prices. sta
istics in Europe corroborate this
heory. Prices of commodities in Eu-
ope have risen 30 per cent since the
utbreak of the war.
Speculation is always the effect of
lflation and the illusion of wealth en-
endered by advancing prices. In Ger
lany, where the initiation is at pres
nj the greatest, there is already quite
boom in stocks.
With the abnormal expansion of
edit in the United States. what will
} the result? An era of speculation
Id of high prices? Are We on the
We OF War Boom?"