Western Carolina Democrat and French Broad hustler. [volume] (Hendersonville, N.C.) 1913-1915, 1915-10-14
LoAN1NG GOODS TO EUROPE.
blunder.

,LOANING GOODS III
saws Joseph French Johnson, Dean
Of New York University School of
Commerce Accounts and Finance; and
Chairman of the Advisory Council OF
the Alexander Hamilton Institute:
The loan of $500, O00, 1000 to the Eng
llish and French governments which
has lust been arranged is a loan not
of money but of goods. 1t will not eff
feet our stock of gold, for this loa
is to be held and used in this country
for the purchase of Jul commodities.
1t will not involve the expectation OF a
single dollar.
The advisability of loaning this half
billion dollars to the two richest ma
tons in Europe depends largely upon
whether or not we wish to sell our
wheat at $1.O0 a bushel or at 80 cents.
AS to the security of the loan there
is no doubt. 1t is unique in that 1T Is
p~referentially guaranteed as to prfnei-
pal and interest by both nations,
heretofore the worlds principal lend
ers. Exceptional circumstances now
compel them to borrow abroad for the
first time. The loan is safe. IT 1t is
not safe, then credit as an aid to COM
MERGE fails. and we must revert to cash
payments and barteI the amDtem of
our ancestors. That this loan is to be
offered to the American public at a
price to yield 5 IL per cent a rate
higher than either country now pays
at home, means only that a condition
is now existing which no amount of
borrowing at home could correct. II
we are to continue our export trade at
all. this condition must be corrected
by a loan in this market where higher
interest rates have always prevailed.
During the past fifteen months the
allied powers have been large buyers
OF our goods, larger than ever before.
For the fiscal year ended June 80. our
trade balance amounted to $1,OS4, 49,
1872, and the department of commerce
officials predict a favorable balance OF
So, 600, 600, 900 for the fiscal year now
well under way. 1t must be assumed
that it is our desire to continue selling
agricultural and Industrial products at
fair prices in order to maintain profits
for our producers and work for u
laborers. If this is to be done, we
must grant the credit to be establish
ed by this loan.
Under the abnormal conditions OF
finance which now exist in Europe, we
cannot sell these goods unless we are
willing to extend credit. In normal
times perhaps we could, for then our
balance would be wiped out by our
borrowing from abroad to develop new
Industries, by paying interest on 1nl
.vestments held abroad by paying fof
freight and other services rendered us
BY the European nations, by the money
used abroad for the expenses OF Amer
lean tourists in excess of amounts
spent here by European travellers and
by remittances of our foreign laborers
to their families. These are the nor
nal means employed for settling trade
balances. Now, ON account OF the
European war, we cannot get imports
in sufficient quantity. even IL we want
them. to enable these other invisible
balances to adjust the situation so that
we can keep on trading.
For a time, perhaps, Europe could
pay in gold for our commodities. But
we are a gold-producing nation, MIN
ing about 500, 600, 900 worth OF the
metal annually, and now we have on
hand more gold than we need.
The circulation statement OF the
treasury department showed that on
| September 1, we had In this country
gold coin, including bullion in the
treasury. amounting to $2,056, 7S2,1Sas
an increase of $3.50, 405D sos since April
1, Our banks do not need all the gold
they have for their reserves. Ther
is a large idle stock on hand. The
A~nglo-French loan will enable us to
-. .a+orast IN funds which otherwise
would lie idle 70 "a long time.
We shall get a profit on goods which
we would not sell at all If We were
not willing to extend credit. Ulti-
mately, Great Britain and France Will
paw us back in commodities. In the
meantime we shall be drawing a fair
rate of return upon our investment in
goods which we produce but do not
now consume. For US, the o means
the saving of a large fund Wnicn VII,
ultimately be consumed when n need
arises and means the continuation OF
a vital foreign trade.