Omaha daily bee., 1915-06-03
Can Europe Withstand
The Economic Strain?
-Esw York Evening Post.

| uO bOUuUlulO bUl GILL
'-Nsw York Evening Post.
c TEP by step along with the movements Of tho
~ beliiFercnt armies the field. there has proceeded
an equally striking and equally unusual movement IN
financial position ~ the fighting nations. In some
respects the accommodating perpe1tes which surround
each and which fairly battle expert prediction
similar. The problem Of the armies, considered
on the hypothesis OF protracted war, is how long
the physical capacity Of the several begerents their
supuy OF able.bodicd citizens will be able to maintain
conflict marked b. the present destruotiyeness OF
life The unparalleled waste OF resources and wealth.
in maintaining the armies and conducting active
hostilities raises the same question in regard to ma
tonal OF capital. IL might, from one point
view argued that the considerations arising from
the Of life more formidable than those aris
the waste OF treasure because the NUMBER OF
soldiers available the call OF fighting state 10 oe
terrnnabe whereas the total sum OF capital subject TO
It's reauiston il But TO this it will be answered
the problem Of keeping the ranks ied even under
circumstances Of prodgious loss Of life. Is familiar 10
military history and that the problem Of meeting such
expenses $ being incurred today Is new. Which,
view OF the matter IL correct 1t is certain that
the present financial and economic aspect OF the waT
is Of the utmost perpexity
New York az the financial capital Of greatest
state is today the real center Of the
world: therefore II il the rate OF exchange at New
York. on the various beigerent countries, which
should measure accurately than anything else
the severity OF Europes economic strain As matter
Of fact, New York exchange all OF those countries
stands today utterly abnormal discount Inc
rates on London Paris. Berlin Vienna, Rome and St
Petersburg in each expressed in figures which
would he wholly impossible in time Of peace. unless
under conditions Of momentary financial panic or OF
currency depreciation
Berlin exchange which Ia come II per cent
below the normal minimum undoubtedly measures
economic fact, a deprecated currency IN Ger
many: Russian exchange on London. which stands at
discount of "a per cent gives apparently similar
indication for that country 1t is at least debatabie
| ant iQft
change and the y per cent depreciation in the rate
on Italy. may have indicated similar, though less
aggravated, conditions; at all events the currency n
those countries does not appear TO be today redeemed
in gold.
or exchange on London which has itself sold nj
discount OF perhaps ia per cent from normal figures
no adverse differences the British currency can
very well drawn this for several reasons. Unlike
the OF the other European bellgerents the
Bank OF England notes are today Freely redeeh'
able in gold. England. moreover, is the only
fighting state which IL regularly exporting gold
to meet adverse foreign balance But beyond even
these considerations II Is we'll known that the current
depreciation Of sterling exchange is due primarily, not
to the pressure OF Londons foreign obligations,
but the assumption by that market OF the outside
burdens Of Its allies
All this however, is only to state the problem-no
TO IT, 20 indicate what later conditions II VIII
lead TO- There two separate factors In the case
each OF which will It's bearing the outcome
One do with the attitude OF the AMERICAN mar
ket. This country Is for the present not only the
banking center the world. but by far the largest
exporting state and the largest creditor on current
international account, Yesterdays foreign trade re-
turns for April show an excess of merchandise ex-
ports during the four last months, OF toeACOoOO
whereas the largest in previous correspond
ing period OF history was 4SOsoOO0o; and to this
| in reckoning markets international advantage.
must be added the saving Of say. S8,0olooO of re-
mittanoes usually made in the period to Americans
abroad. and the remittance. 20 New York, of very
large for safekeeping during war time
In the normal machinery OF international exchange
such A position would always be adjusted either by
greatly Increased import OF foreign merchandise or
by wholesale redemption OF our own securities from
Europe or by largo of capital to the Euro
pean markets. Increased shipments OF merchandise
war-ridden Europe cannot provide 1t has either en-
hausted available supply OF American stocks and
bonds else the of such securities are cling
ing to the surest form of investment at this
time Thera is left the recourse OF lending great
sums OF capital to Europe In one from or
| another-vhether through the granting OF credit
balances through purchase of government secur-
testha Is the quite inevitable result Of the existing
situation.
The outcome OF financial Europes home position
rests other considerations II lie not easy to see
how some at of the fighting states in ease OF
| a long war. avoid relapse, for good while to
come into currency OF rredeemable and deprecated
paper There been idle talk OF Republication
! by those governments-a phrase whose meaning has
apparently been clear even TO those who used IT.
! and Wall street has caught up the notion. In some
vague conjecture 10 whether the war orders and
| the grain exports will be paid for. The answer, il
answer 20 such question should he neeced is that
payment for the shipments is provided for when the
| orders are placed s made in cash by American
| bankers when the goods shipped.
All this is apart from the larger problem-how the
machinery Of European finance bear the
burden OF the expenditure. at time when, ex-
cept for the United states and Holland every I'M
portant fnanc al nation OF the world Is entanged in
] the At present In the twelve years OF the
Napoleonic conflict England IL largely sustaining ITS
I allies; and Fnglands reserve resources, then.
enormous. The problem as II applies 10 Germany
apparently o. asonishingly expert of inter
lacing credit, whose longer scope OF operation It IL
| not easy TO pred Ct.