New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1915-09-15
No Breach of Neutrality
Found in Financing
Export Trade.
EXCHANGE PROBLEM
is MADE EASIER
Support of American Markets
Held by Administration of
Prime Importance.

From The Tribune bureau
Washington, Sept. 14.-So far as the
administration is concerned there is
no reason why the entire needs of the
foreign trade Of the United States can
not be financed by means of the ma
chinery Of the Federal Reserve banks,
which may, as the administration now
interprets the law, rediscount bankers
acceptances drawn 10 pay'for wor sup
plies or other exports. The plan is
put forward here as an alternative, in
whole or in part, for the billion dollar
bond issue now under consideration in
New York
So long as such acceptances are pay
able in dollars in not more than three
months. member banks may advance
money upon them, and under the rul-
ing of last week permitting renewals,
may carry such paper almost indef-
nitely.
No Bar In Law.
This much has been definitely decid-
ed. High officials going over the law
and the international aspects Of the
case found nothing improper, from the
standpoint Of neutrality or banking, in
the means of easing up the tension
caused by the immense excess of ex-
ports over imports, and the certainty
that this excess will increase rather
than decrease.
Paper so discounted may in the first
instance be drawn either by govern
ment, a corporation, an individual or
the accredited agent of a government
acting as such, though it is not con-
sidered likely that the actual signer
would be the government seeking
credit. The only question that would
arise in any event would be the fnan-
cal responsibility of the maker.
American Markets Protected.
The desire OF the administration is
that it will. in the event Of the
failure of other plans TO finance The
requirements of foreign trade, protect
American markets from the partial dry
ing up of business that must follow q
heavy premium on the dollar, and is
preferable at this time at least to ad-
ditional enormous imports of gold
American gold stocks are now higher
than most sound bankers would like
and substantial additions to the great
stock of yellow metal in hand would
tend TO create situation that might
well prove embarrassing
Another advantage of thus meeting
the needs of the hour is that, while
the amount of money available for
long loans is limited. the amount Of
bankers money available is very large.
Officially no questions will be asked
when such acceptances are presented
as 10 the private or official nature OF
the transactions. Are the names good :
will be the only test.
Pro-German Objections Met.
Pro-German objections to thus hn-
ancing the purchases of the Allies are,
IL is believed here, discounted by the
fact that German purchases Of large
quantities of cotton against the tine
when il can be delivered are being
financed in this way. That, at least
was the plan agreed upon. and there
are reasons for thinking that this Ger
man buying has already begun and that
some of the acceptances, based upon
such buying, are already in Federal
Reserve vaults. There is no law
against the re-discount Of foreign CIV
eminent drafts after acceptance and
the administration holds that to for
bid such transactions would in effect
be new legislation by the Federal Re
serve Board.
The feasibility Of meeting the tre-
mendous difficulties of the exchange
situation by some plan that would
make available the great resources OF
bankers money" in America was
pointed out by Francis W. Hirst, editor
of "The London Economist" in his
special cable TO The Tribune, published
on Monday last.
Mr.. Hirst said that while it was
doubtful whether any great fund eX-
isted in the United States for invest.
ment in European securities, easing Of
the credit situation could readily be
accomplished.