The Richmond palladium and sun-telegram. [volume] (Richmond, Ind.) 1907-1939, 1915-07-29
Financier Propounds Prob
lem Which Will Confront
American Bankers and
Creditors When War Ends.
United States Alone Accum-
ulates Capital and Forms
Worlds Free Investment
Market.
BY HENRY cLEWs.

NEW YORK, July 29-How will
, some of the belligerents pay for the
enormous war supplies bought In the
United States? This is the problem
of the future In American financial cir
cles. Orders thus far received already
aggregate over one billion of dollars,
and hundreds of millions more are
practically sure to follow; for peace
is not yet in sight, and the war has
by no means reached its greatest in
tensity.
Representations are futile; yet 1t Is
more than probable that the problem
of financing the war has not reached
the real crisis or test, and an increas-
ing waste of life and property must be
expected as the struggle grows in bit
terness and destructiveness. 1t goes
without saying that some OF the war;
ing nations who are directly or indi-
rectly purchasing war materials here
, can not pay cash to any extent, be-
cause they are evidently spending sew
eral times their national savings in
prosecution of the war.
Use Treasury Notes.
Treasury notes can only be used to
limited extent, and long term credit
obligations will be the only basis on
which these orders can be financed,
because an indefinite period must
elapse before Europe can again send us
sufficient merchandise or gold to even
approximately balance our exports.
Gold we do not absolutely need, and
Europe cannot spare it in large en-
ough amounts. Thus far Europe has
returned us between to 5 hundred
millions of securities; but European
Indebtedness to American manufacture
ers will increase on an enormous scale
during the next six months, and the
Foreign Exchange situation will be
one demanding the highest skill and
resourcefulness for solution. Foreign
holders, especially British. seem un-
willing to part with their American in
vestments. 1t would seem, however,
as II a partial solution will be the
sending back to this country of still
larger portion Of their holdings in
Americans The Canadian $45,OO0,00O
per cent loan, which will probably
be promptly subscribed, will also help
the situation.
The United States is the only i'm
portant nation In the world that Is
now accommodating capital from its
savings. 1t Is also the only free invest
ment market In the world, since all the
great powers of Europe are pouring
their savings and energies into the
wretched melting pot OF war. There
are no indications, however, as yet, of
American disposition to buy foreign
government bonds with any freedom.
A fair amount might be absorbed by
institutions and trust funds here, es-
pecially If terms were made still more
attractive; but the amount would be
relatively small when compared with
the many billions already issued
abroad.
Credits Accumulate.
II, then. American manufacturers
are to continue accepting munition
contracts, some very extensive credits
will have to be arranged for by Amer
lean bankers; and these credits or
short term obligations. whatever they
may be, will eventually have to be ex-
tended or turned into fixed debt in
some form. 1t is well, therefore, to
keep in mind as to what would be the
effect of this immense mass of foreign
credits upon American finances, es-
pecially in view of the fact that the
market for these foreign obligations
on this side will necessarily be limited.
OF course, the credits thus far granted
have imposed no financial strain here.
and they could undoubtedly be greatly