New Britain herald., 1915-08-28
FOREIGN EXCHANGE
 RELIEF IMPERATIVE
Business Outlook GOod-DiMCul- ' |
 ties With Germany Our Only Cloud
iSpecial to the Hcrald.)

undoubtedly be facilitated by the con- ference between American and Brit ish bankers now on the way to this port. Our foreign trade continues seriously deranged, imports being greatly curtailed while exports per- sistently show tremendous eXpan- sion. For example, the exports from New York during the week ending Au- gust 14th were $31,S0O,000 against $10,700,0O0 the same week last year; while our imports, though increasing slightly, are still running far below normal. This excessive preponder ance of exports will continue, and probably upon an even larger scale during the remainder of the calendar year. On June 3Oth the excess of ex- ports had reached $1,OOO, 100000, and some authorities estimate that it will touch as high as $2,O0O, O,000,O0O by December 31. Europe cannot pay in merchandise or gold; some form of credit must be established if we are to accept foreign war orders. The urgency of the crisis is emphasized by the coming to New York of Londons leading bankers The idea of inn porting $250, 100000 gold is less pop ular here than when first broached. l The supply of the precious metal in this country-now estimated at nearly $2,00O, 900, ,0O0-is so excessive that bankers are naturally unwilling to see any further addition because of it's uselessness and it's possible inf1ation- ary tendencies. The latter must be carefully guarded against. It is well to remem Der, however, that it is in fiation of credit that is most dangerous and bankers always have it within their power to curtail credit, whether based upon gold securities merchan- disc or reputation. An excess of gold or money may and sometimes does cause imitation, but this tendency can always be avoided by those who con- trol the lending situation; and now tsaat the Federal reserve system is in | operation imitation could be much 1 more easily resisted. Moreover, if i this proposed $25O,00O,O0O in gold 1 were imported, the credit based there on would be almost entirely devoted l to financing foreign war orders, and would have little effect here beyond 1 the stimulus of war orders which has 1 already been experienced and largely discounted in the present high prices of the war group shares. ; The. settle ment of British obligations by sales of American stocks seems as far off as ever. Good buyers could undoubtedly ! besFfound .ssbut John Bull is evidently indisposed to surrender more of his American investments, which are among the choicest of his possessions xThere has been some talk of mobiliz- ing or massing British holdings of Americans and depositing them here as collateral for loans. But even this plan arouses no particular enahusi- asm. On this side of the Atlantic the most approved plan is, of course, British loan in this market on 'condi- , tions likely to attract American capi- ~tal; but the terms asked are likely to strike hard at British pride and pres .tige; because England cannot expect l to borrow on this side of the Atlantic at rates and terms to which she has been accustomed on the other. Cap 1 ital naturally commands better rates ,; here than in Europe; hence its flow | here in normal years; and American fbuyers would certainly balk at the British income tax on the bonds. i Some one of these plans may possibly l be adopted and an important loan, possibly $50O,OOO,OOO, arranged for at 1 an early date. Others would follow, ; not drawn into the war. If perchance we become involved in military oper- ations against Germany-happily remote contingency-that would ma terially affect the placing of British loan. So far as our immediate finan- cial necessities are concerned, this
 government could easily raise for
 temporary purposes $5O,OOO,OOO by
 sale of Panama per cent. bonds and
 another $100,O00,000 in 3 per cent
 notes, which would carry us along z until congress assembled as usual in Decem mber, when an issue of $3OO,- 00O,0O0 for preparedness, or $5OO,-
 100000 in case of actual war, might
 be added. With the possibility of
 these enormous demands upon the
 American money market before us, it
 is well to move cautiously in all mon
 etary commitments.
 Beware Unwise Confidence.
 At this writing the outlook of
 our relations with Germany is decid-
 edly more encouraging, since Ger
 many through her representatives
 has stated that she would endeavor
 to satisfy our demands when con-
 vinced that she is wrong. The hope,
 however, that Germany will modify
 her methods of submarine warfare to
 suit our ideals should not lead us into
 unwise confidence. While it is to be
 devoutly hoped that President Will
 sons demands will be satisfied, it is
 simply common prudence to keep in
 mind the consequences if they are
 not. As to the war itself, there are
 no dependable peace signs yet in sight, notwithstanding the reace talk