The Washington herald. [volume] (Washington, D.C.) 1906-1939, 1915-04-10
How Europe VIII Pay.

The enormous purchases here by the European
allies of war supplies of every description, inelud-
ing unprecedented quantity of foodstuffs. has
not only come to occupy the center of the stage
in the business world, but even seems to be upon
the point of producing general revival of trade
and industry in the United States. Such a gen
eral revival almost invariably proceeds. at least
seemingly SO, from some particular event. The
stimulus has been rather infrequently supplied
by foreign war; but every one will remember,
nevertheless. that a very decided impetus of the
sort afforded by the Boer war in $780, The
obvious benefit that industries will derive
from supplying European needs the present
occasion has, however, given rise to the very
pertinent inquiry to how the various Euro
pean nations will pay for the enormous ship
ments of grain. clothing and ammunition that
we making to them. Their credits in this
country, caused by the outstanding balance of
trade against at the commencement of the
war and by their sales of our securities since,
have long been exhausted and the sales of foreign
exchange by individuals in the United States
against purchases of commodities recently made
here for European account have forced the price
of exchange to such low point that the net re-
suit thereof is that Europe has to pay what
amounts to premium for further purchases Of
goods made here.
debt and buy grain and more ammunition
from us as they must do, if they are to carry on
the with Germany? Only three ways are pos
sble: One for the allies to make payment to us
in gold another the continuing sale in this market
of American securities owned in France and Eng
land, and another sale to Of the national
securities of France and England themselves. The
experience of recent weeks has plainly enough
indicated that recourse must be had to the last
named eXpcdient. Sales of American securities
owned abroad have practically ceased or are going
on at such dribbing rate that their proceeds arc
inconsequcntial; and this is largely because the
holders Of American securities abroad seem disin
cincd to part with them in heavy volume. 1t is
essential to the governments of both France and
England that they should keep adequate gold
reserve on hand and they therefore do not want to
send gold to in cash payment for what they
buy. Therefore foreign securities must be sent
here from the other side of the Atlantic. Payment
has already been made in this way some extent;
but the foreign requirements for commodities are
rising to such tremendous proportions that opera
tons of greater financial magnitude in the dircc-
ton that has been suggested necessary These
on the point of being consummated in the
purchase by our bankers, and consequent reds
tribution to the public of possibly $500 100000 of
OF France England and Russia it being distinctly
understood, of course, that the money raised on
these notes is to be expended in this country.
The security is, of course, ample and the yield
high. A certain amount of credit has also been
furnished in this way to Germany
The operation referred to, although new in
the history of country, is not new in the
history Of creditor nations. 1t is customary and
inevitable in the career of creditor nations If
we are TO manufacture goods and commodities
and sell them to people all the world, we
must lend to these peoples large portion of
the very money with which to buy the goods
and commodities, that is to say, we must sell
the goods credit, taking due care that the
credit is of high character. This has been the
course pursued by England in all its long and
exceedingly prosperous career great CONNER
cial nation. That we are doing the same thing
is the best testimony that has yet been pro-
duced to the fact that have, indeed, entered
upon a national life as creditor instead
of debtor nation.