The Washington times., 1915-06-16

1t was a great surprise to financial
authorities recently to receive convinc- |
ing evidence that Great Britain now has
more investments In South America than
in the United States. 1t had been Pop
ularly supposed. and very generally In
banking circles. that British investments
In the United States were two or three
times their volume in South America.
One Of the incidents OF the Pan-Amer-
lean financial congress was the devel-
opment of the keen desire among the
South Americans to open market IN
the United States that will help them
take care Of the securities that Europe
Is now getting insistent about turning
| into credits for war purposes.
South America, aside from the food-
| stuffs of the Argentine, Uruguay ana
| Paraguay, has little Of the supplies that
Europe so insistently demands now. No
more has South America the cash with
which to take UP the securities that Eu-
rope wants to get rid of.
Pressure To Sell Growing.
| The pressure to sell has been growing
| Of late, and 1t Is causing distress IN
| the Southern countries. Unable to buy
back their paper. they want to open
market for II in the United States. Es-
pecial inducements in the way OF fu-
ture relationships. trade. use Of Ameri-
can manufactures, and transfer OF H.
nancial affiliations have been rendered
with the utmost frankness. II only the
United States can step into the breach
and help save South America from a
dumping process that its limited gold
stocks simply could not stand.
| 1t all amounts to bargain-counter
| -, States
over the dominating European holdings
In South America. The process looks
complicated. yet IT. is really rather sim
pie enough. The United States has by
far the biggest gold stock and the big
gest and best repository OF credit now
existent In the world.
In effect this country Is asked to
take the South American securities Off
Europes hands. to pay for them in war
supplies and carry" South America
through the crisis OF world finance.
/ Europe To Owe Big Balance.
In the end, despite all our absorptions
of these things, Europe would be GER
tain to owe us a big balance: and when
the time came for payment Of that
balance in the ordinary manner. this
country would have the securities and
with them a good share of the cash
that would help pay for them. The
. question is-and II Is getting to be an
, acute question at more rapid rate
. than is commonly appreciated-how faI
the United States can go In spreading
, the mantle Of its credit organization
; over the many regions OF the worio
that need its protection.
E In their efforts to determine the safe
g limit of American venture into sucf
s find themselves of necessity inquirint
how the war will end. 1t happens tina
the manner of its end is In some way'
= even more important than the time. Il
n the Germanic empires win, the effect OF
: American finance will be very differen
n than II the quadruple entente wins
0 One of the government students OF thi
!, problem who is also an important force
h In deciding government fiscal policies
9 explained 1t In this way:
Parallel In 1871.
The financial results of the Franco
German war of 1901 provide parallel
I on a small scale, to what must happel
after this war. Our civil war was fol
y lowed by an era of great expansion
y especially in railroad building. whicl
was financed chiefly from Europe
n When France was finally defeated b.
t Germany and the indemnity of billio
4 dollars was exacted by her, the Frenc
i people proceeded to draw on London 70
Q gold to meet 1t. London sent 1t alone
and in turn dumped American securitie
i back on the United States in order t
3 reimburse itself.
g The drain on us, together with tn
n y cessation Of enterprises in which Eu
i ropean money was being invested
r. caused the panic of 1873
:. If that war had ended the other way
I and Germany had been compelled t
q pay the indemnity the outside worl'
9 would have been much less affected, be
n cause Germany had then much less In
vestment outside; the indemnity woul'
II have required to be dug out of tn
; pockets of the German people withou
> especially affecting world investments
and the British and American financia
= communities would have been affecte'
u scarcely at all.
d Would Make Last Call On u. S.
IS If we can imagine Germany over
10 whelming France and Great Britain
r, now, and imposing on them huge indem
N mites. as she would undoubtedly dc
a those countries would make their las
20 and most urgent call on us. The
d would have to sacrifice whatever the
l. had that we could take, and whethe
q we wanted to take II or not comm
" right on top of our long series of ad
Is vances in credit and supplies to then
IF II would present a very aValanche G
II demand on this country's resources.
IT. on the other hand, Germany shoul
T. be defeated the situation would b
~ much less onerous for the Unite
D. States, because German holdings her
Is have largely been liquidated now. an
az in any event are not comparable wit
,e those of England and France. German
ls would be in the position that she woul
Iy have occupied had she been the loser !
e. 1871: It would be necessary for tn
n government TO issue securities and tur
3. them into gold through her own peopl
a and In whatever other markets might
le willing to buy.
ID But Germany would have no customt
y at hand that could be forced TO buy
lie she would have to scrape together he
le indemnity wherever II could be ha'
5e and pay It whenever in the future sh
10 should be able. Right now, the que'
ton whether big indemnities are TO
piled as a Pelion on the Ossa OF hug
war expenses. u beginning to give re-