The Washington herald., 1915-01-20
How England and Europe VIII Pay Us.

The problems of the late summer and early
autumn, stupendous and difficult as they were,
have been worked out to correct solutions by men
of finance, men of commerce and the great sales
men of the United States, and the proof of the
latest quotations for foreign exchange. These
are now so low that, if there were not hindrances
and if the American people insisted upon it, gold
would be flowing this way.
Nevertheless, there is another problem whose
solution must be made correctly before absolutely
normal conditions restored in the United
States. This problem is created by the magnitude
of the exports crossing the from the
United States, principally to European ports.
Should present tendencies be maintained through
out the present year the United States will have
gained visible apparent trade balance on its
foreign commerce OF approximately $1,000 ooo, ,ooo
The problem, therefore, is this: How these
vast exports to be paid for? The answer must
be worked out by men of finance, and the factors
those which provided by the very delicate
symmetrical and far-reaching mechanisms of in
ternatonal finance. In other words the problem
is a bankers problem.
Britain and Europe have the gold to spare, they
also have highly artificial and governmental con-
troll of methods of preventing exports of gold.
Yet these American commodities must be paid
for. Great Britain and the continent of Europe
are now selling to the United States, relatively
speaking, very few commodities. We cannot,
therefore, rely upon imports for the facilities with
which to pay for exports. There appears to
be only way in which for year or more the
chief part of these payments can be made. Great
Britain and the continent of Europe have invested
in the United States or in negotiable instruments
which represent American wealth an amount esti-
mated sometimes as high as $1,000 900, 900; some
times as low as $1,000 100000 1t has recently be-
come the habit of men of finance to average these
two sums and put the amount at $4,000 ooo, 900.
Much the greater part OF this investment is in
American securities of the kind which dealt
in upon the floors of the exchanges 1t is believed
to be inevitable that Great Britain and Europe
will pay for the American commodities by selling
American securities. There will, however, be so
far any forecast, sudden
panic producing offerings of these securities They
will be gradually absorbed by the United States
The mechanism and facilities OF international
financing will make it possible, by the transfer
Of these securities to the United States easily to
quidate some part of English and European in
to the United States. Should the war
continue for another year it is not improbable that
the ownership of the greater part of these securi
ties will pass to the citizens of the United States
and it is not inconceivable that result of the
war will be the making of the United States a
creditor nation in the sense that no longer do
England and Europe possess vast amounts of
American securities. In that case we shall save
he interest and dividends which heretofore we
nave paid to the foreign holders OF American Sc
,urities, and these dividends and the interest |
whose payments have been invisible, have in the
past served greatly to reduce our favorable inter
national trade balance.