New-York tribune., 1915-09-20
Plan for Financing Our
Foreign Trade with
Credit to Europe.
BANKERS OF WHOLE
COUNTRY MUST JOIN
Method Through Which Foreign
Customers Can Pay for Goods
To Be Provided.

T lOTclHU puICHhStIS W P"S ava ~N'
ports OF foodstuffs, raw materials.
manufactures ano munitions occupied
financial attention last week. The
stock market was overshadowed and
security movements were Of compare
lively little significance. We are tax
ING ND proposition new TO this coun-
try. and indeed in magnitude such
( an international loan is new in worid
finance. Il was necessary that the
whole country must join in lending the
hundreds Of millions Of dollars re-
ouired. The frst efforts Of the Anglo
French mission and Of our own bank
ers was to make plain that what was
being provided was not merely assist
ance TO purchasers Of ammunition and
other war supplies hut a means by
which we could finance our own Tor
eign trade.
II necessary, our visitors are under
stood 10 have pointed out, the govern.
noent contracts placed here can be pald
of the growing proportion OF manu-
fac+ures' the bulk of our exports are
not munitions of war, but grain ana
other food stufs, cotton, copper and
so on. There are other neutral mar
kets. II no credit arrangements are
made here the high prices Europe
would have TO pay for funds in Ne"
York might divert good part OF the
business elsewhere. The break OF
drafts on London 20 4.5O IN the pound
two weeks ago gave wide warning OF
what was 20 be guarded against
OF course. no other neutral nation
;s so we'll able as we TO grant accom-
modation TO our foreign customers, ana
the trade will stay here It is not pur-
chasing power that is lacking, but the
machinery through which payment Is
made. In ordinary years the season
course Of trade produces uneven re
ouirement here for funds IN LONDON
and in London for funds in the United
States. But the probable needs OF
the different months can be estimated,
Tourists letters Of credit in spring and
early summer are offset by shipments of
grain and cotton in the fall. The great
foreign exchange houses are accus-
TONED through their operations 10
stabilize rates.
International Credit Disturbed.
When war broke out last summer we
were short Of exchange, the tourist sea-
son was al its height and our autumn
shipments had not begun. London made
the mistake Of interrupting the norma !
course Of foreign exchange BY demand
ing an immediate settlement SO great
became the need for bills on London
/ that sight drafts sold as high as 81 IN
/ the pound. That disturbance to the or
/ dinary interchange of credit has lnten-
sifed the difficulty that now confronts
| London when movement OF goods mas
| turned so heavily in our favor,
/, Our billion dolla~ trade balance IN
the fiscal year ended June 30 will prob
ably be increased a hunsred fold for
! the calendar year. Tourists eXpendi-
lures are light, payment to the other
side on account of shipping and insur..
ance has been reduced and remittance OF
funds TO the home country by our for
eign- born residents is smaller. Our
purchases of American securities,
though great, still left a balance on cur
rent account that had 20 be met with
gold. and there is great outgo OF
goods TO be financed. Confidence IN
stability of exchange rates was dis
turbed a wear ago. This has height
ened Fngiand's natural disadvantage
that comes TO nation at war when
finds itself obliged 20 purchase heavily
from other countries.
We should, however, keep clearly in
mind that il is the method of making
payment. not the power TO pay. that Is
troubling London, the money centre for
European purchasers. British invest
ments in this country's stocks and
| bonds alone make an imposing total,
and that is only one small part of
| Great Britains wealth. What we have
/ 70 do is to arrange with the visiting
1 financiers to bridge over this tempo
/ rary lack in means Of settling accounts,
so that the trade, profitable 10 our for
eign customers and TO ourselves, may
| be continued.
The national necessity of some credit
arrangements has been emphasized by
great financial houses here which,
/ though their sympathy lies with Ger
many in the war, have expressed will
! ingness to join in a plan that dement's
our commerce Some fanatics have
protested that our neutrality may be
/ impaired. ms though il were not a Gus
tomary thing for warring powers to
/ borrow in neutral markets. The Mid
! die West has seen some pressure by
! German depositors and directors
against such a loan as has been pro-
posed. but pressure Of this sort can, il
necessary, be met in kind.
Bargaining Over Terms of Loan.
Before the week closed It was accept
ed that the credit would be granted
1 The terms, as in all bargaining. were
not easily arranged. Our bankers are
familiar with the temper OF American
investors and with the legal require
ments for institutional buying. SO we
may trust them 20 modify where il is
essential the ideas of the Anglo-French
financiers. In the long run the bankers
of the country must take the bulk OF
obligations offered. The proposition
presented must make country wide
appeal. The whole nation benefits
through our exports and must join in
maintaining them.
A rising market for sterling ex-
change demand selling at 4.73 in the
pound indicated confidence in some
adequate solution Of the problem pre-
sented. The local money market, with
over S220,000000 of surplus reserve a.
the end of the week, continued as favor
able 70 borrowers as ever, in spite OF
the prospect that much of our idle
funds was soon 70 be employed. In
vestment houses figure that, so thor
oughly had this accommodation TO Eu
rope been foreseen, there was no rea'
son TO look for any important change