Daily capital journal. (Salem, Oregon) 1903-1919, 1915-09-01

ana brltlsh bankers now on tne way
to this port Our foreign trade contin-
ues seriously deranged, imports being
greatly curtailed while exports persis-
tently show tremendous expansion.
For example, the exports from New
York during the week ending August |
l4th were $31 100000 against $l0,T00,- |
600 the same week last year; while car
imports, though increasing slightly, are
still running far below normal. This
excessive preponderance of exports will
continue, and probably upon an even
larger scale during the remainder of
the calendar year. On June 30th. the
excess of exports had reached Sl,0O0,.
100000, and some authorities estimate
that it will touch as high as $1,000
100000 by December 3lst. Europe can
net 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 Lon
don s leading bankers. The idea of
! importing $3.50, 100000 gold is less pop
ular mere than when first broached.
The supply of the precious metal in this
country-now estimated at nearly 81
! 600 900 ,000-is so excessive that our
bankers are naturally unwilling to see
any further addition because of its use
lessness and its possible inflationary
tendencies. The latter must be care
fully guarded against. 1t is well to re-
member. however that it is initiation
of credit that is most dangerous, and
bankers always have it within their
power to curtail credit, whether based
upon gold, securities, merchandise or
reputation. An excess of gold or money
may and sometimes does cause initiation,
1 but this tendency can always be avoid
ed by those who control the lending sit
uation; and now that the federal re-
serve system is in operation initiation
could be mucn more easily resisted,
Moreover if this proposed $3.50, 600
in gold were imported, the credit based
thereon would be almost entirely de-
voted to financing foreign war orders,
and wnld have little effect here be-
yond the stimulus of war orders which
has already been experienced and large
ly 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
be fcCnd, but John Bull is evidently in
disposed to surrender more of mis- Am
erican investments, which are among
the choicest of his possessions. There
has been some talk of mobilizing or
massing British holdings of Americans
and depositing them here as collateral
for loans. But even this plan arouses
no particular enthusiasm. On this side
of the Atlantic tine most approved plan
is, of course a British loan in this mar
ket on conditions likely to attract Am
erican capital: but the terms asked are
likely to strike hard at British pride
and prestige; because England cannot
expect to borrow on this side Of the
Atlantic at rates and terms to whicl
she has been accustomed ON the other
Capital naturally commands better
rates here than in Europe; hence its
flow here in normal years; and Ameri-
can buyers would certainly balk at t1e
British income tax on the bonds. Some
, one of these plans may possibly be
adopted and an important loan, pos
sibly $500,000,000, arranged for at an
early date. Others would follow, pro
vided the United States itself is not
drawn into the war, If perchance we
become involved in military operations
against Germany - happily a remote
contingency-tha would materially af-
feet the placing of a British loan. So
far as our immediate financial necessi-
ties are concerned this government
could easily raise for temporary pnr.
poses $50,000000 by sale of Panama .
per cent bonds and another 800, ,00O,.
600 in per cent notes, which would
carry us along until congress assembled
T as usual in December, when an issue
n of $300,000000 for preparedness, or
$500 100000 in case of actual war
might be added. With the possibility
of these enormous demands upon the
7 American money market before us, il
q is well to move cautiously in all mome
tary commitments
At this writing the outlook of oul
relations with Germany is decidedly
q more encouraging, since Germany
y through her representatives has stated
that she would endeavOr TO satisfy oul
] demands when convinced that she il
. wrong. The hope however, that Ger
4 many will modify her methods Of sub
|
not lead us into unwise confidence
y While it il to be devoutly noped thai
q President Wilson 5 demands will be sat
? sfied, it is simply commm prudence
I TO keep in mind the consequences il
they are not As to the war itself
there are no dependable peace sign
yet in sight, notwithstanding the peac,
talk that occasionally comes to the sur
n face. Passion between tine belligerent'
I is too intensely aroused and the issue
r involved are too vital TO allow settle
$ ment before one side or the other il
y exhausted. II may be that wearinesi
( and even financial embarrassment ar
d making themselves felt, but Of the sneei
@ exhaustion necessary 10 end the wa
g there is as yet no positive symptoms
!. anywhere, unless it be in Turkey
which has been the "Sck Man Of Eu
T rope" for generations.
i Some idea of the increase in business
. activity can be obtained from com
' parison of bank cearings with Il yea
ago. The total clcarings at prlncipa
y cities for the first three weeks Of Aug
= ust was ,977OOOO00, against $6,04l,
y 100000 year ago, an increase OF w,
1903, 100000. Included in these total
J. are clearings at New York, amounting
:. to S5,095, 100000 against Y2,7l5,0OO,
G 900 last year. an Increase OF s2,2sO,O
J. 600. The great increase IN New fTk
o rlearings is chiefly due TO the excep
tional outburst Of activity on the stocl
G exchange, which was closed year age